Banking
Credit Card Interest Calculator: 10 Ways it can help you save money
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Credit Card Interest Calculator with interest
This credit card payoff calculator will show you the amount of interest you are paying and two ways to save thousands.
Credit cards can be a lifesaver when you need emergency cash, but they can also be a slow death for your finances.
Making minimal payments usually means paying more than twice the amount you initially charged on your credit card bill over a certain period of years.
Credit card companies will entice you with reward programs and low referral fees. Sure, everyone tells themselves they will pay off their card every month, but how often does that happen?
Card issuers are useless. Their business is attracting interest. Making the minimum payment of 2.5% on a $5,000 balance at 18% interest will take almost 20 years and cost you $6,500 in interest alone.
See also: How To Get Free Money Today: Top 10 Stress-free Ways
Using a credit card interest calculator to see the cost of those new designer jeans could be a wake-up call to pay off the card.
Not only will this tool help you calculate your credit card interest, but it will also show you how much you can save by either paying a little more each month or lowering your interest rate.
I’ve included detailed instructions below and how to get the most out of the credit card payoff calculator, so be sure to scroll down.
FAQ’s
How do you calculate the interest per month?
To calculate the monthly interest rate, simply divide the annual interest rate by 12 months. The resulting monthly interest rate is 0.417%.
The total number of terms is calculated by multiplying the number of years by 12 months since interest is compounded monthly.
How do I calculate the minimum payment on my credit card?
Some credit card issuers calculate the minimum payment as a percentage of the total balance on your statement, including interest and fees.
This is usually between 1% and 3%. For example, let’s say the minimum payment is calculated as 2% of the balance, or $5,000. You would owe the minimum payment of $100.
What is the formula for calculating simple interest?
Simple Interest Formula and Calculation: Using this simple interest formula, find the final invested amount, A, using the simple interest formula- : A= P(1 + rt) where the P is the principal amount invested at interest rate R. % per period per t period.
How do you calculate the annual interest?
Simple interest equation (principal + interest)
A = total amount accrued (principal + interest)
P = principal amount.
I = Interest amount.
r = Interest rate per year in decimal. r = R / 100.
R = Interest rate per year as a percentage. R = r * 100.
t = the period of time included in a month or year.
How to use the credit card interest calculator
It is the credit card companies’ job to keep you paying interest. They do this by hiding the actual cost of debt with low monthly payments, introductory rates, and cashback.
Using a credit card interest calculator can help you cut through the scams and see the actual cost of your card.
This credit card payoff calculator is designed to be as simple as possible while still providing you with usable information.
First, enter the amount you owe. This can be included on one card or all your credit cards together.
The annual interest rate will appear in the box as an integer without a percent sign. For example, an interest rate of 18% would be 18.
If you total the balances of all your credit cards, you will need to use a weighted average for the interest rates. This means multiplying the interest rate for each credit card by the percentage of total debt.
See also: Cash Advance Credit Cards: Fees, Alternatives, and Interest Explained.
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For example, if you owe $3,000 on one card at 15% and $2,000 on another card at a rate of 18%, the weighted average rate would be 16.2%. That is ($3,000 divided by $5,000 total debt multiplied by 15%, and $2,000 divided by $5,000 multiplied by 18%).
If your debts are close to the same amount, you can also use the rate or average of one card.
Choose either the lowest payment rate or a fixed payment that you can pay each month. Most credit cards charge a minimum payment of 2% or $20 per month. This keeps your payments very low but also allows you to pay interest for as long as possible.
Click Calculate Credit Card Payoff
The interest calculator tool will show you how long it will take to pay off your credit card and the total interest you will eventually pay. This alone can be a big shock. You could end up paying off your card for years and losing thousands in interest.
The best part of the payoff calculator lies in the following two features. The interest calculator will show you how much interest you can save by adding as little as $50 to your monthly payment.
It will also show you how much you could also save if you were to reduce your interest rate by 5% on a consolidation loan.
Let’s look at an example using the credit card payoff calculator.
James has a total of $15,000 in credit card debt on three cards and pays an average of 20% per year. He didn’t intend to have that much debt, but shortly after losing his job, he had some emergency bills and needed his cards to pay for the expenses.
He would pay 5% of the balance each month and pay it off as soon as possible.
Jim is paying far more than the minimum payment, but it will take him 152 months, almost 13 years, to pay off the card.
He ends up paying $7,445 in interest. This is almost half of the amount he initially charged.
This is really not bad as far as the interest goes because he pays a hefty amount every month. Making the minimum payment of about 2% of the balance will take more than twice as long and cost more than twice the amount he charged.
Jim could save $4,311 in interest by adding $50 per month to his payments, but that may be difficult to do given that he is already making large payments each month.
Since the rate on his card is high, his better option might be to consolidate his credit card debt with a personal loan. By lowering the interest rate by only 5%, he can save over $5,000 on his credit card payments and pay off the loan in half the time.
Note: This is just an estimate of the amount of money you could save with a personal loan at the rate 5% lower than your current credit card rate.
The average consolidation loan rate is about 14%, but actual loan rates can be higher or lower than credit card rates.
I created this simple loan repayment calculator to help you find more accurate savings on loans for debt consolidation. You can also check the rates here to see exactly how much you can save by paying off your cards.
Credit Card Calculator With Interest
How do you calculate interest on credit cards?
Credit card interest is the amount of money you will be charged if you do not pay your credit card bill in full each month. It acts as a daily rate, calculated by dividing the annual percentage rate by 365 and multiplying the current balance by the daily rate. The amount will then be added to your bill.
How to get the most out of credit card payoffs
If your credit card has a balance of less than $1,000, you may be able to add a little extra to your monthly payment. Anything more than that, and you could be stuck making payments for a very long time.
Paying for these credit cards should be at the top of your personal financial goals, especially if the rates are above April 12%.
Whenever you pay so much in debt, it is just a bad situation, and that interest will squeeze you for years.
In addition to saving money, there are many other reasons to pay off credit card debt.
Credit cards are marked as a revolving debt on your credit report. This is a bad type of debt because the payment dates and payments are not fixed.
Consolidating with a personal loan or simply paying off your cards can boost your FICO by wiping out this bad debt.
You do not know how much you need to pay or even what your credit card charges are. If you miss a payment and your monthly payment goes up or down based on your balance, your charges could skyrocket.
Credit cards are used for emergencies and some business expenses, but otherwise, they are sealed up tightly. Credit cards are far too tempting and easy to overuse.
Credit cards can get you into trouble faster than you think, and it is challenging to keep track of the actual costs. Just one purchase can mean years of payments and double the cost of what you purchased.
See also: Top 6 Facts on How to Fill Out a Money Order Step by Step.
Paying off high-interest credit card debts on their terms is sometimes the best answer. Even paying the minimum payment plus additional fees can cost you years of payments and thousands in lost interest.
It is the credit card companies’ business that you make the payments, and they continue to collect the interest.
Consolidation loans for credit card payments are not for everyone, but they have the potential to lower your monthly payments and interest rates. That alone can save you thousands of dollars in interest on your credit cards. Still, there are several other benefits to consider as well.
Loans for consolidation have fixed monthly payments and are listed on your credit report as non-spinning debt.
It is a more appropriate type of debt because it has a repayment date and helps to increase your FICO.
Consolidating your credit card balances into one loan can help you manage your debt and remember to pay it. Fixed monthly payments also make monthly budgeting easier.
Interest rates on personal loans vary but are generally lower than those offered by credit cards. Personal loans will continue to appear on your credit report.
Still, you do not have to pledge collateral as you would with a mortgage or car loan. The term is usually three or five years, and the monthly payments are fixed.
Understand that a consolidation loan does not just cost you more space and money on your credit cards. It can get you into even more trouble and lead you down a path of never-ending interest.
Once you have paid off your high-interest loans, you can focus more on making your money work for you through investments.
Use these investment calculators to see how fast your retirement income can grow.
Credit cards can be a financial tool, but they can also be a quick financial trap. Paying off a credit card with minimal payments can mean thousands in interest and years of monthly payments.
This credit card interest calculator tool is your first step to understanding how much you pay and how much you can save.
Try Free Credit Card Calculator With Interest Here
See also: Top 10 Money Management Tips To Build Financial Security
Fact Check
We strive to provide the latest valuable information for our readers with accuracy and fairness. If you would like to add to this post or advertise with us, don’t hesitate contact us. If you see something that doesn’t look right, contact us!
Reference: Peerfinance101.com
Insurance
Fixed Annuities Explained: Pros, Cons and How They Work
Table of Contents
Fixed Annuities Explained: Pros, Cons and How They Work
When it comes to financial planning, retirement planning is essential. There are several investment options available in the market, including fixed annuities.
In this article, we will delve into the basics of fixed annuities, their advantages and disadvantages, and how they work.
What Are Fixed Annuities?
Fixed annuities are a type of investment contract between an individual and an insurance company.
An individual makes a lump-sum payment or several payments to the insurance company. The insurance company promises to provide a fixed interest rate and regular payments to the individual for a specific period.
Types of Fixed Annuities
There are several types of fixed annuities, including:
- Immediate Annuities: This annuity type provides regular income payments immediately after the individual makes a lump-sum payment to the insurance company.
- Deferred Annuities: This annuity type provides regular income payments at a later date, either after a specific number of years or when the individual reaches a specific age.
- Fixed-Indexed Annuities: This annuity type provides a fixed interest rate plus additional interest based on the performance of a stock market index.
Pros of Fixed Annuities
Fixed annuities have several advantages, including:
- Guaranteed Income: Fixed annuities provide a guaranteed stream of income for a specific period.
- Stable Returns: Fixed annuities provide stable returns compared to other investment options in the market.
- Tax-Deferred Growth: Fixed annuities provide tax-deferred growth on the investment until the individual withdraws the money.
Cons of Fixed Annuities
Fixed annuities have some disadvantages, including:
- Low Returns: Fixed annuities provide low returns compared to other investment options in the market.
- Limited Flexibility: Fixed annuities have limited flexibility when it comes to withdrawing the money before the end of the contract period.
- Inflation Risk: Fixed annuities do not account for inflation, and the purchasing power of the regular payments may decrease over time.
How Do Fixed Annuities Work?
When an individual invests in a fixed annuity, the insurance company invests the money in bonds or other fixed-income securities. The insurance company then provides regular payments to the individual, which includes a fixed interest rate and a return of the principal amount.
Who Should Invest in Fixed Annuities?
Fixed annuities are suitable for individuals who:
- Want Guaranteed Income: Fixed annuities provide a guaranteed stream of income for a specific period, making them suitable for individuals who want a stable income during retirement.
- Want Low-Risk Investments: Fixed annuities provide stable returns and have low risk compared to other investment options in the market.
- Have a Long-Term Investment Horizon: Fixed annuities are suitable for individuals with a long-term investment horizon and can wait for several years before receiving regular income payments.
How to Buy Fixed Annuities?
Fixed annuities can be purchased through insurance companies, brokers, or financial advisors. It is essential to compare different annuity contracts and understand the terms and conditions before investing in a fixed annuity.
Conclusion
Fixed annuities are a popular investment option for individuals planning for retirement.
They provide a guaranteed stream of income for a specific period, have stable returns, and provide tax-deferred growth.
However, they also have some disadvantages, including low returns and limited flexibility. It is essential to weigh the pros and cons before investing in a fixed annuity.
FAQs
What happens to a fixed annuity when the individual dies?
- If the individual dies during the contract period, the remaining
What happens to a fixed annuity when the individual dies?
- If the individual dies during the contract period, the remaining balance may be paid to the designated beneficiary.
Can the interest rate on a fixed annuity change over time?
- No, the interest rate on a fixed annuity is fixed for the duration of the contract.
Can an individual withdraw money from a fixed annuity before the end of the contract period?
- Yes, but there may be penalties and fees for early withdrawals.
Are fixed annuities insured by the government?
- No, fixed annuities are not insured by the government but are backed by the financial strength of the insurance company.
Are there any tax implications when an individual withdraws money from a fixed annuity?
- Yes, withdrawals from fixed annuities may be subject to taxes and penalties, depending on the individual’s age and the duration of the contract. It is important to consult a tax advisor before making any withdrawals.
Fact Check
We strive to provide the latest valuable information for our readers with accuracy and fairness.
If you would like to add to this post or advertise with us, don’t hesitate to contact us. If you see something that doesn’t look right, contact us!
Insurance
7 Methods Legacy Insurance coverage Know-how Could Be Holding you Again
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This put up is a part of a collection sponsored by AgentSync.
The Southwest Airways disaster that rounded out 2022 could have been a nightmare for everybody concerned, however there was one optimistic that got here out of it. The debacle helped begin a bigger dialog on a subject we’ve been speaking about for fairly a while now: the issue with outdated expertise. As we start the brand new 12 months, we anticipate professionals throughout all industries taking a better take a look at the cracks of their technological infrastructure and legacy techniques.
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Legacy expertise and the insurance coverage trade usually go hand in hand
The insurance coverage trade is not any stranger to outdated expertise. As a legacy trade, legacy tech is par for the course. It wasn’t till the COVID-19 pandemic started inflicting enterprise shutdowns that many insurers had been mainly compelled to replace their processes and softwares to be able to proceed working beneath new security pointers.
In some ways, the COVID-19 pandemic was the catalyst for the insurance coverage trade’s digital revolution. However, numerous carriers and businesses are nonetheless counting on the outdated manner of doing issues. Why is that?
The reply isn’t easy. Some could also be apprehensive about the fee whereas others are extra involved with the problem of changing legacy techniques. Some are simply afraid the change might be an excessive amount of for workers and that it’ll trigger extra enterprise disruption than it’s price. Nevertheless, if Southwest’s breakdown taught us something, it’s that no excuse is price risking the harm that outdated expertise may cause to your group, staff, and clients.
So, with out additional ado, listed here are seven methods your legacy system could also be inflicting your insurance coverage enterprise extra hurt than good.
**We’ll be exploring these issues from an insurance coverage perspective (as that’s our experience), however many of those issues apply to companies in any trade that also depend on outdated expertise.
1. Legacy expertise is cost-heavy
One of many extra widespread roadblocks we hear from insurance coverage specialists who’re nonetheless working their enterprise on outdated techniques is {that a} new resolution is simply not within the price range. Whereas it’s true that the upfront prices of including extra fashionable instruments to your tech stack could also be substantial, they’re nothing in comparison with the price of sustaining legacy techniques. Selecting to maintain doing issues the way in which you’ve at all times completed them as a result of it appears simpler (or cheaper) now is called technical debt. And like most money owed, they finally come due.
The older techniques get, the extra they price to take care of. Plus, legacy expertise might be consuming away at an organizations’ backside line in different, much less apparent methods. For instance, an outdated company administration system (AMS) or buyer relationship administration system (CRM) won’t have the ability to supply the options or ease of use that staff, producers, shoppers, and downstream distribution channel companions are in search of. If these clients, staff, and companions aren’t happy with their experiences, they could take their enterprise (and their expertise) elsewhere, looking for a extra fashionable expertise.
2. Legacy expertise can hurt your status
You’re employed arduous to take care of a optimistic status in your insurance coverage enterprise. A poor status may lead your shoppers straight into the arms of your opponents and negatively influence your backside line. We noticed first hand how outdated expertise managed to tug Southwest Airways’ status by the mud in a matter of days.
In terms of insurance coverage, there doesn’t essentially should be a large breakdown or error together with your legacy system to negatively influence how present and potential clients and staff view your organization. It will also be the day-in-day-out tedium of outdated expertise that lastly will get to individuals. If you happen to proceed utilizing legacy expertise, staff, prospects, and shoppers could view your organization as being behind the instances. And in case your technological infrastructure seems prefer it’s caught up to now you’ll have a more durable time convincing anybody of your future spot out there.
3. Legacy expertise might get you in regulatory bother
A significant downside of legacy expertise is its incapability to combine with newer software program. Insurance coverage professionals want techniques that may talk with one another and paint an entire image of their knowledge to be able to make knowledgeable enterprise selections. The complexity of the insurance coverage trade’s state-by-state regulation system means it’s essential for all techniques to be built-in and up to date in actual time to keep away from compliance violations.
Updating to an automatic built-in compliance resolution (like AgentSync) can create important compliance administration price financial savings and guarantee steady producer and company compliance – with out the guide effort that you simply’d want to make sure the identical stage of compliance immediately.
4. Legacy expertise can inhibit development at your company, service, or MGA/MGU
Legacy techniques are hardly ever scalable. Trendy issues want fashionable options and legacy expertise is usually unequipped to handle present wants. Due to this, legacy techniques is usually a main barrier to a company’s development and innovation.
The longer an company waits to replace its legacy techniques, the more durable it will likely be to handle present market wants and acquire new market share. If you happen to’re not able to fully overhaul your group’s legacy techniques, there are different choices that may assist you to dip your foot within the pool of innovation.
5. Legacy expertise fuels inefficient workflows
Legacy techniques can block your group from realizing its full potential. With outdated expertise, it’s doubtless your employees is spending an excessive amount of time on guide, repetitive, and non-revenue-generating duties. Not solely is that this a waste of expertise, but it surely additionally will increase the possibility of human error and non-compliance.
With out up to date insurtech, processes like producer onboarding and compliance administration eat up much more time and assets. Keep in mind earlier once we talked about that legacy techniques don’t normally combine simply with different expertise? This lack of communication can create knowledge and workflow silos that block data from flowing between groups and finally decelerate processes.
6. Legacy expertise might make you extra susceptible to cyber assaults
Hackers are continually discovering new methods to sneak previous a company’s cyber safety measures and entry its safe knowledge. As software program ages, it might not have the defenses wanted to guard towards newer cyber threats. Cyber safety is a giant concern for insurance coverage businesses and carriers which frequently retailer huge quantities of delicate consumer data. Outdated software program might make that knowledge extra susceptible to an information breach, bringing you proper again to earlier factors about reputational hurt and arduous greenback prices.
7. Legacy expertise might negatively influence hiring efforts
We’ve mentioned it earlier than and we’ll say it once more – the insurance coverage trade is within the midst of a hiring disaster. Mass retirement and a shrinking expertise pool means high-quality candidates have extra energy to decide on the place they’d prefer to work. And in the event you suppose the possibility to work with software program that predates their grandmother is an efficient promoting level then oh boy do we have now information for you.
Right this moment’s job-seekers are in search of fashionable firms which can be utilizing the newest expertise to enhance each the client and worker expertise. Providing producers a high-tech expertise with much less time spent on guide, repetitive, time-consuming duties might assist as you proceed to compete for expertise.
The time to modernize your insurtech is now!
The very best by date in your insurtech has come and gone and it’s time to rethink the “if it ain’t broke, don’t repair it” mindset you might have beforehand held concerning your legacy techniques. In actuality, it’s a lot better to repair the issue earlier than a serious malfunction (once more, you simply have to have a look at Southwest Airways for proof). Clearly, outdated expertise can do much more hurt than good on the subject of your company, service, or MGA.
Don’t be like Southwest and wait till the harm is already completed. The time has come to throw out your legacy techniques together with the issues they’re inflicting your insurance coverage enterprise. If you happen to’re able to declare your independence from outdated tech and processes see how AgentSync may help you attain your full potential.
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Banking
No exit ramp for Fed’s Powell till he creates a recession, economist says
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Federal Reserve Chair Jerome H. Powell testifies earlier than a U.S. Senate Banking, Housing, and City Affairs Committee listening to on “The Semiannual Financial Coverage Report back to the Congress” on Capitol Hill in Washington, March 7, 2023.
Kevin Lamarque | Reuters
The U.S. Federal Reserve can’t disrupt its cycle of rate of interest will increase till the nation enters a recession, in keeping with TS Lombard Chief U.S. Economist Steven Blitz.
“There isn’t a exit from this till he [Fed Chair Jerome Powell] does create a recession, ’til unemployment goes up, and that’s when the Fed charges will cease being hiked,” Blitz instructed CNBC’s “Squawk Field Europe” on Wednesday.
He harassed that the Fed lacks readability on the ceiling of rate of interest will increase within the absence of such an financial slowdown.
“They don’t know the place the highest price is, as a result of they don’t know the place inflation settles down and not using a recession.”
Powell instructed lawmakers on Tuesday that stronger-than-expected financial information in current weeks suggests the “final degree of rates of interest is more likely to be increased than beforehand anticipated,” because the central financial institution appears to be like to pull inflation again all the way down to Earth.
The Federal Open Market Committee’s subsequent financial coverage assembly on March 21 and 22 can be essential for international inventory markets, with traders intently watching whether or not policymakers go for an rate of interest hike of 25 or 50 foundation factors.
Market expectations for the terminal Fed funds price had been round 5.1% in December, however have risen steadily. Goldman Sachs lifted its terminal price goal vary forecast to five.5-5.75% on Tuesday in mild of Powell’s testimony, consistent with present market pricing in keeping with CME Group information.
Bond yields spiked, and U.S. inventory markets bought off sharply on the again of Powell’s feedback, with the Dow closing practically 575 factors decrease and turning detrimental for 2023. The S&P 500 slid 1.53% to shut beneath the important thing 4,000 threshold, and the Nasdaq Composite misplaced 1.25%
“There’s going to be a recession, and the Fed goes to push the purpose they usually’re gonna get the unemployment price to at the least 4.5%, in my guess it in all probability finally ends up getting as much as as excessive as 5.5%,” Blitz mentioned.
He famous that there are “rumblings” of an financial slowdown within the type of layoffs within the finance and tech sectors and a stalling housing market. Together with weak point in U.S. inventory market, Blitz instructed an “asset crunch and the beginnings of the potential for a credit score crunch,” within the type of banks pulling again on lending, might be underway.
“Both you get a recession mid-year and the highest price is 5.5% or there’s sufficient momentum, the January numbers are proper, and the Fed retains going and in the event that they do hold going, my guess is that the Fed’s going to rise up to six.5% on the funds price earlier than issues actually begin to decelerate and reverse,” he mentioned.
“So by way of danger belongings, it is not a query of whether or not, it is actually a query of when, and the longer this factor goes, the upper the speed has to get to.”
The January shopper value index rose 0.5% month-on-month as rising shelter, fuel and gas costs took their toll on customers, indicating a possible reversal of the inflation slowdown seen in late 2022.
The labor market remained crimson scorching to start out the 12 months, with 517,000 jobs added in January and the unemployment price hitting a 53-year low.
The February jobs report is due from the Labor Division on Friday and the February CPI studying is slated for Tuesday.
Within the analysis be aware saying its improve to the terminal price forecast, Goldman Sachs mentioned that it expects the median dot within the March Abstract of Financial Projections to rise by 50 foundation factors to five.5-5.75% no matter whether or not the FOMC opts for 25 or 50 foundation factors.
The Wall Avenue large additionally expects the info forward of the March assembly to be “blended however agency on internet,” with JOLTS job openings falling by 800,000 to supply reassurance that price hikes are working, alongside an above-consensus forecast for a 250,000 payroll achieve however a delicate 0.3% rise in common hourly earnings.
Goldman additionally forecasts a agency 0.45% month-to-month improve in core CPI in February, and mentioned that the mixture of possible information creates “some danger that the FOMC may hike by 50bp in March as a substitute of 25bp.”
“In current months we’ve argued that the drag on GDP progress from final 12 months’s fiscal and financial coverage tightening is fading, not rising, and that which means that the important thing danger for the financial system is a untimely reacceleration, not an imminent recession,” Goldman economists mentioned.
“Final weekend we famous that shopper spending specifically poses upside danger to progress that, if realized, may lead the FOMC to hike by greater than at present anticipated so as to tighten monetary circumstances and hold demand progress beneath potential in order that labor market rebalancing stays on observe.”
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