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Credit Card Debt Calculator

The Credit Card Optimizer helps you determine the best distribution of your credit card debt. By entering your credit card balances, rates and credit limits this calculator determines which balance transfers will produce the greatest savings.
Author: Josiah Mwangi
Josiah Mwangi

Writer, Contributor

Experience

Josiah Mwangi is a Certified Public Accountant and has an MBA in Finance. He has been writing for the Huff Post, Corporate Finance Insitute, Smarter.loans, and other top publications. In his free time, he goes hiking alongside his two German Shepherds
Interest Rates Last Update: April 15, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Josiah Mwangi
Josiah Mwangi

Writer, Contributor

Experience

Josiah Mwangi is a Certified Public Accountant and has an MBA in Finance. He has been writing for the Huff Post, Corporate Finance Insitute, Smarter.loans, and other top publications. In his free time, he goes hiking alongside his two German Shepherds
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Table of Content

I Don't Need Background, Take Me to the Calculator!

How To Decrease Your Credit Card Rate

Sometimes, there’s no need to get new loans and credit cards; why not lower the interest on your current ones instead?

Most people don’t even consider this approach. You don’t just have the opportunity to reduce your interest rate; there are also other benefits too.

Moreover, let's look at ways together how we can reduce the interest rate on your credit cards.

1. Achieve A Good Credit Score

You can lower your rate just by having a great credit rating.

Your credit score shows the borrower whether or not you pay your debts off on time. If you want to know your credit score, learn more here. If you don’t delay payments and your debt is in good standing you’ll have a great credit rating. Furthermore, this shows the lender that you are trustworthy.

Also, you have the option to request a free credit report as well.

You can obtain your credit from the following credit bureaus: Equifax, Experian, and TransUnion. Obtaining these reports is revealing and insightful. Also, getting your credit reports gives you the opportunity to view all of your financial information, including your bank accounts.

Don’t forget:

It’s possible that there are errors on your credit report that gives you a negative score. Furthermore, remember to always dispute negative information that’s on your credit report. If you are in need of credit, read here how you can get a credit card with no history.

Tip: How can you improve your credit score?

In most cases, people only pay the interest on their loans. Your payments are not as effective if you’re only paying interest. Paying the principal is crucial to paying off your loan. Reducing debt improves a person's credit score rapidly. In addition, technology is always here to help.

The quicker you pay off debt, the faster your credit score increases. Also, don’t worry if you have bad credit. Here are some ways to repair your bad credit.

This chart created with Experian data shows that those with an average to good credit score have an average credit utilization ratio of the optimum 33%. This ratio drops significantly for those with very good and excellent scores.

At the other end of the scale, the chart shows that those with poor credit scores typically have a very high credit utilization ratio, with an average of 73%. This will be a massive factor in lending decisions for those in this group.

 

2. Negotiate With Your Credit Card Company

Meet your lender head-on. Because banks want happy customers, they have ways to lower your interest rate. On the other hand, it’s not an easy task.

Figure out the steps to achieve this goal. If you are in need of a lender – start here. It’s surprising how so many people are hesitant to ask for better terms. In addition, some people think it’s a waste of time.

  3. Convince Your Bank

Want to know how?

First off, show them that you make consistent payments on time. Also, leverage the fact that you are a long-term client. This is a serious statement because banks love having a loyal customer base. Also, tell them you have better offers from other competitive banks.

It's important to be persistent. If you can't take the heat, success is not possible. Also, don't be too adamant about your own terms. Always remain open to making compromises.

4. Transfer Your Balance

A balance transfer is transferring a balance to another card.

If the new card has a lower interest rate, you have hit the jackpot!

Keep in mind:

The amount of debt you transfer to your new card can't exceed the balance of what's on that card. For example, if you have a balance or $7000 on your old card, and your new card has a balance of $5500, only $5500 of that $7000 is transferable.

Most credit card offers an appealing introductory interest rate. Moreover, in some cases, it is zero percent interest. When the introductory period is over, you begin paying the normal interest rate. Also, take notice of various fees such as balance transfer and annual fees.

Final words

Having your interest rate reduced on your card is a huge step to save money and invest in other things. The main way to achieve this goal is to maintain an excellent credit score.

As of result, your interest can be reduced without you even asking for it, as well as having better terms. Contact your bank and negotiate if that’s not the case.

Remember: most people succeed in renegotiating new terms for their existing credit cards. If all else fails, you have the option to initiate a balance transfer.

Calculator Definitions

Credit Card Debt Calculator – Definitions

Balance

Your current balance on your credit card.

Interest rate

The annual percentage rate you pay on this credit card. The rate you enter is used to calculate the interest on all future payments for the credit card. The length of time to pay off this credit card may be much greater than calculated if you enter a low promotional interest rate that is only fixed for short period of time.

Payment

This is your initial minimum monthly payment. We calculate your minimum monthly payment as 4% of your current outstanding balance or $15 whichever is more. While your actual minimum monthly payment may be slightly different, this is one of the most common methods used by credit card companies to calculate minimum payments.

Credit limit

This is the total amount of credit you have on this credit card. The optimizer will not allow you to have credit card balances that are over your credit limit.

Include a new low interest credit card

Check this box to include a new credit card in the optimization. This allows you to transfer your existing balances to a new low interest card and see the results.

New credit card limit

The total amount of credit you have for the new credit card.

New credit card rate

The annual percentage rate you will pay on the new credit card. The rate you enter is used to calculate the interest on all future payments for the credit card. The length of time to pay off this credit card may be much greater than calculated if you enter a low promotional rate that is only fixed for a short period of time.

Picture of Josiah Mwangi

Josiah Mwangi

Josiah Mwangi is a Certified Public Accountant and has an MBA in Finance. He has been writing for the Huff Post, Corporate Finance Insitute, Smarter.loans, and other top publications. In his free time, he goes hiking alongside his two German Shepherds
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