The happenings "inside" the Wisconsin State Treasury and across the street at the State Capitol

Money Matters: The Cost of Credit


credit cards

The Office of the State Treasurer keeps an eye on Wisconsin’s money and we’d like to help you keep an eye on yours with the help of our friend at www.practicalmoneyskills.com.

Credit cards offer many advantages. There is the convenience of being able to buy needed items now and the security of not having to carry cash. You also receive fraud protection and in some cases rewards for making purchases.  In February, we’ve learned credit terminology, the pros and cons of using credit.  Now, you want to know how much it will really cost you to use? 

If you don’t pay off your credit card balance every month, the interest assessed on your account means you may be paying more than you expect. And if you spend beyond your means, the resulting interest and debt can become significant.

See how much extra you might pay on a $1,000 credit card purchase with varying interest rates:

Total Purchase Amount
This is the balance due on your credit card.
$1,000
$1,000
$1,000
Credit Card APR
This is the annual interest rate on your credit card.
10%
15%
25%
Monthly Payment
This includes paying just the minimum monthly payment, calculated in this example as $40.
$40
$40
$40
Number of Months to Pay Off Purchase Amount*
This is how long it will take you to pay off the entire balance.
29
31
36
Total Finance Charge
This is the total amount of money you will pay just in interest.
$126
$207
$427
Total Cost
This is the final amount you will pay for your purchase.
$1,126
$1,207
$1,427

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s