Carrying a balance on your credit card erodes the value of any “rewards” that might be earned by using the card. Use this credit card calculator to gauge the cost of paying interest on a credit card balance against the benefit of earning rewards. In the first field, enter the percent value of the basic reward your credit card pays. Typically this is 1% or 2%. (Airmile rewards are usually valued between 1% and 2% as well.) Next enter your credit card expenses for a typical month. Some credit cards offera higher rebate percent for specific items such a gas or groceries; enter this percent together with an estimate of the monthly qualified charges.
Finally, enter the dollar value of the credit card balance you typically carry together with the APR rate (%) for your credit card. The calculator assumes that the monthly balance you carry remains relatively constant. If you let this balance grow, the net value of any rewards is diminished further.
The Credit Card Calculator script is available here for free distribution or use on financial websites.
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