Find out how your credit card annual fee increases the APR that is advertised by the credit card issuers with this easy APR calculation tool.
The APR you were quoted by your credit card issuer may not necessarily represent the interest rate you will pay on your credit card when you take its annual fee and other factors into consideration.
There are many detailed calculations that go into the interest rate you’ll pay (too detailed for this post), and you can find out more through this Wikipedia APR Explanation.
However, it’s good to know how much you’re actually paying for your Credit Card Loan in order to get a grasp on getting yourself out of debt.
Calculate Your Credit Card APR
Principal – Put the amount of your current balance in this field.
Additional Cost – Put your credit card annual fee in this field.
Interest Rate – Put the APR quoted to you by your credit card issuer.
Number of Months – Put 12 months here to calculate the APR.
That’s what the credit card companies didn’t tell you.
Now of course, you’re credit card balance may decrease over the period of one year, causing your APR to drop as well, and there are other minor fluctuations, but this will give you a better idea of how much your credit card is costing you.
If you are in a situation where you are just making minimum monthly payments that barely cover your interest charges while not really making a dent in your principal balance, you could end up maintaining the same credit card balance over time while paying enormous amounts of money in interest and fees.
Oh well, don’t get depressed, there are still other options.
Consider a card that gives you a long term fixed low interest rate on your balance transfer with no annual fee. It’s a great way to start paying off your debt if you have a large balance on a credit card with a high interest rate and an annual fee.
Those with small balances may want to consider one of these Balance Transfer Credit Cards that have no annual fees, no balance transfer fees, and 0% interest rates on balance transfer for six full months.
Calculate your current APR and consider some of your options, but make sure you check out the actual interest you’ll be paying before you apply for a credit card with an annual fee.