INTEREST AMOUNT CALCULATOR
Whether it's a student, auto, or personal loan. Any borrowed funds usually come with an interest rate. This means that with each payment you make, you are putting money back to the principle, or original borrowed amount, as well as paying a charge to borrow the money in the first place. Knowing your interest rate is vital when taking out a loan or line of credit. Use the calculator below by entering the amount you owe, and the interest rate on that account. With that information, we'll tell you just how much you're spending every year on interest.
If you're using this to look at your total debt across multiple accounts, you're going to need to figure out the weighted-average interest rate across all of those accounts (don't worry! We're building a tool for this as we speak). If you're having a hard time with this, just know that the average credit card APR in 2024 is between 23% and 24%.
You see how much interest can add to the amount of money that you're responsible for paying back to the banks? It is too often that we underestimate the effect that the interest rate on our loans have to our finances. Simply sticking to the minimum allowed payment is how many consumers find themselves trapped in a seemingly endless mountain of debts owed to banks who care for nothing more than to claw that money back from us.
Is there any way out of paying to borrow money? When you look at it, this is simply the charge of a service offered to us. But who really wants to pay to spend money? Especially if you didn't have the funds in the first place. Interest isn't always avoidable. But here's some tips and strategies that may help you out:
Pay your monthly balance off in full
For some people, this is easier said than done. Though, if you're not a heavy spender, the simplest way to avoid paying interest is to not owe anything at the end of the month. This is the core of healthy credit usage, and how you attain trust with being issued a revolving credit line in the first place. You don't even have to remember to do this, as you can easily set up an automatic draft on a monthly basis to pay your balance in full.
Avoid predatory lending
Not all credit is good. Many companies run a business model in which they lend to desperate consumers and charge exorbitant amounts in interest. We're talking about numbers running up to 80%, even 150% or more. This can lead people to be trapped in to paying two, three or more times what they initially borrowed.
Open a credit card with a 0% interest rate
Being given a card with an interest rate of zero might sound a little counter intuitive on the side of the creditor. But banks like to play the long game. Many banks will offer you the opportunity to transfer your interest accruing balance from another creditor, and essentially take ownership of the debt. On the consumers side, this is a valid and super effective strategy to "stop the bleeding", and catch up on payments. Just make sure you're aware of the interest rate that you're signing up for after the introductory period.
Negotiate with your creditor
In the same way that balances can be negotiated and settled for lower amounts, your interest rate is also a number that can be negotiated. Provided you have a good history with your creditor, you can use points like your consistent payment history, or high credit score as leverage to ask for a lower interest rate. If you have a card or account for a long time, it's likely that you have a higher interest rate than you really deserve with that creditor, as they we're taking a chance when you were brought in as a customer. As you build a history and become more credible with your lender, it is reasonable to ask for accommodations that reflect the your trustworthiness as a borrower.
It's valuable to be aware of your interest rate, as this is a key number in how much you're going to be paying back on a loan or line of credit. Be sure to stay aware of this when entering in agreements with creditors. If you're already caught in a situation where the interest rate is less than optimal, don't be scared to ask your creditors what can be done about this. You never know what you might end up with. The worst that can happen is that the bank denies your request.