I recently found out about a fun little calculator offered by Credit Card Chaser. (No, FCC, Credit Card Chaser isn’t paying me. But sometimes Joel Ohman, one of the guys over there, writes guests posts for me.) It’s called the Lifetime Credit Card Cost Calculator, and it shows you how much you would pay for common items if you charge them and then pay them off over time at credit card interest rates.
It’s a fun calculator to doodle around with. For instance, I discovered that a cheeseburger, put on a card with a 19% interest rate, and paid off over three years, would ultimately cost $9.08, rather than the $6.88 you though you were paying. The difference is even more dramatic the more expensive the items become. Put your $8,935 diamond engagement ring on there, and you are actually paying $11,790.78. The interest will kill you.
You can also enter your own item’s purchase cost. That $50 dinner would cost $65.98, and the fancy $1,500 laptop would cost $1,979.43. You can adjust for your own credit card’s interest rate, and the expected time to pay it off. Depending on how long you take to pay off your card, and how high your interest rate is, makes a big difference.
I really like this tool. It can be invaluable as you perform a cost benefit analysis on purchases you want to make with a credit card. And it just might change your mind about whether or not it’s worth it.