Carrying a credit card balance is costly--particularly for consumers who make only the minimum monthly payment. The Federal Reserve Board's online Credit Card Repayment Calculator will allow consumers to estimate how long it will take to pay their credit card bills under different payment scenarios.
"By identifying the true cost of credit, this new tool can help consumers devise a plan to manage the cost of carrying a credit card balance," said Federal Reserve Board Governor Elizabeth A. Duke. The median balance on credit cards, as reported in the Federal Reserve Board's 2007 Survey of Consumer Finances, is $3,000. The average interest rate on cards that carry a balance is 13 percent. Using the calculator, consumers will find that paying off a $3,000 balance at an interest rate of 13 percent could take as long as 16 years and cost $2,812 in interest if they only make the minimum payment each month.
"We hope that, armed with this information, consumers can make better decisions for themselves and their families," Governor Duke said.
**Disclaimer: Content obtained from the US Federal Reserve's website at: https://www.federalreserve.gov/newsevents/pressreleases/other20090416a.htm