Unexpectedly Intriguing!
06 July 2009

Kate Kashman of The Paycheck Chronicles blog recently used Bankrate.com's tool to find out how long it would take to pay off \$5,710 of credit card debt if she only made the minimum payment for it.

The answer? 303 months (or 25 years and 3 months), assuming that the minimum payment made was one percent of the balance (including interest).

The thing is though that since Kate ran her numbers, a number of the biggest credit card issuers have significantly increased their minimum requireed payments. In response to political pressure from regulators at the government's Office of the Comptroller of the Currency, many large lending institutions have doubled their required minimum payments, with many going from minimum payments based on 2% of the outstanding balance to 4%.

That may impact your cash flow a bit today, but what about paying off your credit card at the new, higher levels? Do you have any idea how long it will take to pay your credit card off now? (Assuming, that is, you don't go right back out and start charging it back up again.)

We here at Political Calculations don't know either, but at least we have the tool to do the math for you! Enter your data in the fields below, including the information from your credit card issuer outlining what their minimum payment percentage and their minimum fixed payment amount (usually, the greater of the two applies), and we'll tell you just how long you'll be in "credit indentured servitude" (for the record, we stop the calculations at 100 years, which we justify by assuming that the debt is fully paid by your heirs in settling your estate....)

Input Data Values
Initial Amount Owed [\$USD]
Interest Rate [%]
Minimum Payment (Percentage of Amount Owed)
Absolute Minimum Payment - Fixed Amount [\$USD]

Credit Card Payment Data
Calculated Results Values
Amount of Interest You'll Rack Up
Number of Minimum Payments You'll Make
Number of Years to Fully Pay Down Your Debt
Total Amount of All Payments You'll Make
Code created with the assistance of Political Calculations

Running the default values, with the minimum interest rate or minimum payment amount set at 2.0% and \$25.00 respectively, we find that it would take 14.6 years to pay off this credit card debt at the old minimum payment levels, requiring \$8,215.56 in payments over that time. If we double these amounts to 4.0% and \$50.00, we find that reduces the duration of the payments to 6.1 years, with total payments summing to \$6,723.97.

So while a borrower making minimum payments today will have their cash flow pinched, there is a beneficial tradeoff in that they would pay off their debt some 8.5 years earlier, assuming they don't charge it right back up in the meantime.

### Psst!... Want the Code?

Hey buddy! Yeah, you! C'mere a minute....

Have we got a deal for you. Right now, for a limited time only, we're *giving* away the code for this tool!

What's the catch? There isn't any. We just ask that you keep the "Code created with the assistance of Political Calculations" text and link with the tool and inform your readers if you modify anything other than the default form values.

So here's how you do it. The text box below contains the standalone web page code for the tool in this post. Copy and paste it into your preferred text editor (such as Notepad, etc.) and save it on your web server or PC with a ".html" extension.

If you want it on your blog, you'll need to copy and paste everything that appears between (and including) the "<SCRIPT LANGUAGE="JavaScript">" and the "</SCRIPT>" tags into the Head section of your blog's template. Then copy and paste everything that appears between (but not including) the "<BODY>" and "</BODY>" HTML tags into a regular blog post.

You'll also notice that the <BODY> code doesn't have any line breaks - this is to accommodate those bloggers whose blogging platforms automatically insert them, and who would therefore see a jumble of blank lines around the form table.

Ready for the code? Here it is....

Good luck!

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

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