Debt Calculator - Definitions
| Term | Definition |
| Credit cards | Enter up to 10 credit card accounts, one on each line. |
| Balance | Your current balance on your credit card. |
| Interest rates | This is the annual percentage rate (APR) that you pay on each credit card. The rate you enter is used to calculate the interest on all future payments for a credit card. The length of time to pay off credit cards may be much greater than calculated if you enter a low promotional interest rate that is only good for a short period of time, your payments will be understated. |
| APR | The APR (annual percentage rate) is the yearly rate of interest and other fees paid to acquire a loan. The APR calculation incorporate fees and interest into a single rate. Lenders are requires by law to disclose the APR. This rate is used to compare various loans. |
| Auto loans | Click on the details button to enter any auto loans you may have. The details page is designed to let you enter your current monthly payment, the term (in months), the starting balance, and the number of months you have left. It then calculates your outstanding balance and interest rate. You can enter up to three installment loans. |
| Other loans | Click on the details button to enter any additional installment loans you may have. The details page is designed to let you enter your current monthly payment, the term (in months), the starting balance, and the number of months you have left. It then calculates your outstanding balance and interest rate. You can enter up to six installment loans. |
| Payment | This is your initial monthly payment. For credit cards, if you checked the "use credit card minimum payments" box, your monthly payment is calculated as 2% of your current outstanding balance. With the "use credit card minimum payments" box checked, your monthly payment will decrease as your balance is paid down. This can greatly increase the length of time it takes to pay off your credit cards. Uncheck this box to enter your own monthly payment that will remain the same until your balance is paid in full.
( We calculate your minimum monthly payment as 2% of your current outstanding balance. While your actual minimum monthly payment may be slightly different, this is one of the most common methods used by credit card companies to calculate minimum payments.) |