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Credit Card Cash Back vs Low APR Calculator

Low Interest Rate(APR) Card
Cash Back Card
Credit Card Related
Minimum Payment Pay Off Balance Transfer Airline vs. Low APR
Calculated Results
Year 1 Cash Back Card
Interest Paid160.89
Cash Back Reward156.00
End Balance2,404.89
Year 1 Low APR Card
Interest Paid113.11
End Balance2,513.11
Cash Back Card will save 108.23 after 1 year
Year 2 Cash Back Card
Interest Paid708.37
Fee Paid25.00
Cash Back Reward312.00
End Balance5,196.37
Year 2 Low APR Card
Interest Paid489.38
End Balance5,289.38
Cash Back Card will save 68.01 after 2 years
Year 3 Cash Back Card
Interest Paid1,704.60
Fee Paid50.00
Cash Back Reward468.00
End Balance8,436.60
Year 3 Low APR Card
Interest Paid1,156.36
End Balance8,356.36
Low APR Card will save 130.24 after 3 years

Yearly Data Compare

Year Cash Back Interest Cash Back Reward Cash Back Balance Low APR Interest Low APR Balance
1 160.89 156.00 2,404.89 113.11 2,513.11
2 708.37 312.00 5,196.37 489.38 5,289.38
3 1,704.60 468.00 8,436.60 1,156.36 8,356.36

Credit Card Glossary

Credit Card APR
The annual percentage rate (APR) is the interest rate charged on credit card balances expressed in a standardized, annualized way. This rate is applied each month that an outstanding balance is present. For example, for a balance of $3000 with APR of 20%, the monthly interest is calculated as: \[ 3000 \times 0.2 \div 12 = 50 \]
Introductory APR

Most of the credit card issuer will give you a lower APR for a promotional period (normally is one year). That lower APR called introductory APR. The APR after that period called regular APR.

Annual fee

annual (yearly) fee charged by a credit card company each year for use of a credit card. This is a separated fee from interest charge on unpaid balances. While annual fees were once common, they largely disappeared in the 80s and 90s, remaining only on a few classes of cards, such as secured cards or those that offer good reward.

Available credit

Available credit is the difference between the credit limit and outstanding charges on the account. It is the amount that is available to be charged to a credit card.

Average daily balance

Average daily balance is a key number used in the formula that computes how much interest you have to pay on a credit card balance. An average daily balance is determined by adding the balance of each day and then dividing that total by the number of days in the billing cycle.

Balance transfer

A balance transfer occurs when the outstanding balance of one or multiple credit cards is moved to another credit card account. The new card will normally have a lower APR so that the card holder can save money. Most credit card issuers offer introductory balance transfer APRs that are lower than the regular APR. Therefore, if you can pay off the balance during that period, you can save even more. Balance transfers usually have fees.

Cardholder agreement

A cardholder agreement provides the terms and conditions of a credit card account. This agreement is required by federal law as a consumer disclosure. It also represents a binding agreement between card issuers and their customers. It must include the annual percentage rate, the monthly minimum payment formula, annual fees and dispute resolution processes. Changes in the cardholder agreement can be made, with written advance notice, at any time by the issuer. Cardholders have the right to cancel their cards if they do not accept such changes in terms, and pay off existing balances under the previous account terms.

Cash back

Cash back is a reward program by the credit card company that returns to you a percentage of the total amount you spent on your credit card over a specific period of time, usually monthly.

Credit limit

A credit limit is the maximum amount of unpaid balance that can be charged to a credit card. The size of a credit limit, and how much of it has been borrowed, have a large influence on consumer credit scores. Low credit utilization that is, a credit limit on which little has been borrowed leads to a higher credit score. Credit limit is also known as a credit line.

Minimum payment

The minimum payment is the lowest amount of money that you are required to pay on your credit card statement each month. See your credit card agreement document to find how the minimum payment for the card is calculated. Until 2004, minimum payments were commonly as low as 2 percent, which meant that any large balance could take decades to pay off if only the minimum payment was made. Under pressure from federal banking regulators, card issuers ramped up the required minimum payment. The industry standard is now to calculate the minimum as all fees and interest due that month plus 1 percent of the principal amount owed represented as i+1