How It Works
Calculating Credit Debt Accrual over Time
When you carry debt, each month that debt grows if you don’t take action to pay it down. A large portion of the population is stuck in a continuing cycle of only paying the minimum payment each month. If you never purchasing anything on credit again, then eventually your balance owing will return to zero. However, there is a much faster way to pay of your debt, and that is to make additional payment above your credit cards minimum required amount.
The Real Damage Calculator is designed to show you how much you’ll save over time if you pay more towards your debt.
For example, if you’re thinking of purchasing a new tv, the Real Damage Calculator will show you how much money you’ll save over time if put that money towards your debt vs. spending the money on a brand new TV. The money you save is actually the real price of that TV because that’s how much it costs you over time. That, is the Real damage.
Annual Percentage Rate (APR)
Credit cards have the highest Annual Percentage Rate of all other types of borrowing. Quick and easy Credit has it’s price and the Credit companies want a good return on the money they lend. APR’s can vary greatly depending on your credit history. Common interest rates can be anywhere from 8% to 29.9%. If you don’t know your APR, you can check your monthly statement.
Monthly Minimum Payment
The minimum monthly payment you must make is determined by your credit card issuer. Depending on your part of the world, credit laws require that credit issuers collect the accrued monthly interest plus one percent of the outstanding balance. In theory, this forces you to pay at least one percent of your outstanding balance. Some credit issuers require higher minimum payments. Some reaching Interest plus five percent. It may seem counter productive, but the credit card companies that require higher minimum payments are actually doing you a huge favor, because they are forcing you to pay five time more against your outstanding balance which results in paying off your debt sooner and saving a lot on interest charges.
Additional Monthly Payments
The best way to pay off credit debt faster is to make additional monthly payments beyond the required monthly minimum payment. The Real Damage Calculator provided the ability to enter any additional monthly payments you may regularly make.