Credit Card Calculator

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Credit card calculator is an important part of having a credit card. It is essential to understand the process of credit card calculations. Otherwise it may be very difficult for a cardholder to understand how the billing in the statements of each month is done. It may result in misunderstandings and misgivings on both sides that may be easily avoided with a simple understanding of the calculating process of credit card payments.

Process of Credit Card Calculations

A large number of problems arise in the minds of the cardholders when they are unable to assess the process of calculations in their billing statements. However certain measures can be adopted to avoid such difficulties.
  • Reading the Documents – it is very important to read all documents carefully before applying for a credit card. They may be written in very small letters but all important and vital information should be read carefully and understood.

  • Verification of all calculations – after a thorough reading is complete it is important to verify all such details with the bank or issuing company.

  • Understanding the calculation process – confusions often arise in the calculation process because a cardholder may upon receiving the statement calculate the rate of interest on an annual basis. It is important to note here that the rate of interest shown in the statements is for a period of 30 days or 1 month.

  • Credit Interests – another point of conflict among cardholders is that they may often resort to paying the minimum amount that is due instead of the full amount. But that leaves a bigger portion of the due as credit and the interest rate often compounds on that. This becomes difficult to reason or understand later on.

  • Nature of Credit Cards – cardholders should understand the type of card that they are applying for. The rate of interest may vary on the basis of the credit limit allowed in that category.

  • Penalties – it is very important to assess at the time of application the penalties that are involved in the transactions of the card. Otherwise these may be the hidden aspects of a card to haunt the holder later on.

  • Extra Charges – there are charges like education cess, service taxes that are levied by the government. They have to be paid compulsorily.

How to Make a Credit Card Calculation

Here is an example of a credit card calculation for your reference.
  • You have a Platinum card of a bank.
  • The rate of interest on your card is 2.65% per month.
  • You have made a purchase of an amount of ` 10,000/ on your card.
  • The date of issue of the statement is 11th of the month
  • The last date of payment is 30th of the month.
  • The total amount due on the card is 10,000/ plus the interest of 2.65% that totals to an amount of ` 10,265/ There is a not of an amount that falls under minimum amount due. This amount is calculated @ of 5% of your total dues. It is advisable not to fall in this cycle as it leads to revolving credit. It means that you end up prolonging the cycle of payment thus the cycle on interests also.
Here is how your credit card statement will look like

Amt of purchase Rate of interest
(per month)
Date of issue Last date of payment Min Amt Due
` 10,000/ 2.65% 11th Jan, 2010 30th jan, 2010 513.25


Note: There are additional charges like education cess, service taxes. These are levied by the government on the companies to be taken from the cardholders. They will have to be paid.