Bills.com Launches New Minimum Credit Card Payments Calculator

Americans continue to hold high levels of credit card debt, with consumer money resource Bills.com estimating more than $2,500 of credit card debt for every man, woman and child in the United States as of January 2011 . To help consumers better understand the time and money implications of paying off credit cards using only minimum payments, Bills.com today introduced the Minimum Payments Calculator.

With just a few basic entries, this simple yet powerful calculator compares how long it will take cardholders to pay off their debt and the total amount of interest they will pay when making minimum credit card payments versus fixed payments. The calculator distinguishes itself from similar offerings by presenting this time and dollar difference as side-by-side results. Other calculators force users to click through to separate pages, and often display results as amortization tables instead of easy to understand visual graphs and charts.

"This calculator is a powerful reminder that the minimum monthly payment is a very costly way to pay down your credit card debt," said Virginia Sullivan, vice president of consumer education at Bills.com. "As your balance declines, so does your minimum payment, effectively extending your time to becoming debt free and increasing the total amount of interest you pay. While this can be attractive in the short term because it frees up monthly cash flow, it is exponentially more damaging in the long run."

For example, someone with $6,500 in debt on a 19 percent interest rate card with a minimum payment computed as four percent of the balance will owe a beginning payment of $260 per month. By paying just the suggested minimum each month, it will take approximately 11.5 years and $10,573 in total principal and interest payments to become debt free.

By comparison, if that same cardholder consistently paid $260 per month – even as their suggested minimum payment declined – they would be debt free in less than three years at a total cost of $8,340. If that same cardholder is able to make a fixed payment of $350 per month, the debt will be paid off in just under two years at a total cost of $7,758.

"It takes mere seconds on the Bills.com Minimum Payments Calculator to understand how credit card companies can lock you into a lifetime of debt using suggested minimum payments," continued Sullivan. "Consumers need to be realistic with themselves and take back ownership of the relationship with their credit cards."

To learn more about credit cards and credit card debt, please visit the Bills.com Credit Card Resource. To ask a money question of a Bills.com expert and receive free, personalized advice, please visit Ask Bill.