When in need of urgent finances, your credit card can be extremely useful. It comes in handy when it comes to monthly expenses, occasional shopping, paying rent, booking vacations, and making regular payments in daily life.
But what if you need urgent cash?
There are two alternatives – you can credit card cash withdrawal or you can apply for a credit card loan. If you need cash which is limited to the available credit limit, then you can use this option. For example, you need urgent cash to pay school/college fees. Then cash withdrawal is a great option.
But if you need heavy cash or money in your account for business expenses, emergency travel, medical expenses, or any other reasons, then you must apply for a credit card loan. It is imperative to use a credit card loan calculator before you apply for one, as it offers several advantages and helps you make informed decisions. Here we will learn more about the calculator and how you can use it.
What is a Credit Card Loan Calculator?
A credit card calculator is a digital tool that helps you assess the monthly EMIs needed to cover the loan. You have to enter the required loan amount, the interest rate offered to you by the financial institution, and the number of years for which you need the loan.
The calculator gives you results in seconds. It gives you the estimated EMI amount you would have to pay every month, the total interest component you would be paying on your loan, and a repayment schedule (amortization table). It is a free financial tool, free of cost and available 24/7 on the web. It also saves you from tedious manual calculations, which can be erroneous.
How to Use a Credit Card Loan Calculator?
The credit card loan calculator uses algorithms and a formula to instantly help you with answers.
The formula used by the calculator is [P×R×(1+R) n] ÷ [(1+R) n-1], where
- P = The loan amount
- R = Rate of interest offered to you by the financial institution
- N= Loan Tenure
Once you enter all three parameters in the tool, it gives you:
- E = EMI amount that is payable each month
- Principal amount or loan amount that needs to be paid
- Interest amount that you would be paying toward your loan
- Amortization schedule, which is a month-by-month bifurcation, on how much EMI you pay, the interest component and principal amount component in each EMI, and the remaining balance. This helps you understand how much more you have to pay so that you can work on early repayments also, if possible.
Why Should You Use a Credit Card Loan Calculator?
There are several benefits of using a Credit Card Loan Calculator:
One of the key components used in a calculator is the interest rate offered by credit card providers. You can compare different interest rates, and based on the EMI outcome and your affordability, you can judge which financial institution is offering you the best deal.
If the EMI outcome is out of your reach, you can reduce the loan amount or increase the loan tenure accordingly. Trying various combinations in these parameters helps you reach the perfect loan amount, tenure, and EMI amount, that fits your monthly budget.
The amortization schedule helps you assess how much you have paid toward your credit card loan and how much you are left with. You can also make part-payments or prepayments for the foreclosure of your loan based on this schedule.
Ease of Use and Availability
Using the calculator is user-friendly, convenient, available online, and extremely simple to use. You get results within seconds without room for error or miscalculation.
Improve your Financial Health
The calculator gives you an idea about your debt and the time it will take to repay the debt. You can plan your other debt, repayments, and other financial liabilities accordingly. Keeping track of how much you need and how much you can repay in the shortest amount of time is something that this calculator helps you strategize.
An instant credit card can help you fulfil your financial needs, whether in the form of card usage or a cash loan. A credit card calculator is a simple digital tool which is extremely advantageous. You can make faster decisions, leaving no room for manual errors. It helps you make the right decision and modify parameters like loan amount and tenure according to your preference, convenience, and budget.