# How to calculate interest only payments

### Things You'll Need

## Instructions

Call your credit card company and ask the representative for the percentage that the company uses to calculate your minimum credit card payment. Due to recent regulations, many companies now have to set your minimum payment at as much as 4 percent of your balance each month. Let's use 4 percent as the minimum payment percentage and 14 percent as the annual interest rate on the card.

In Excel, type "Balance" in the first column, tab over and type "Payment" in the next column, then "Interest" and "Principal" in the next two columns. These will be your headings.

Press "Enter" to go to the next line. Type your current credit card balance under the first row beneath "Balance" (cell A2). Tab over to the next column under "Payment" (B2) and type in the following formula: "=.04*A2" (leave out the quotation marks). The .04 represents the minimum payment percentage from step 1. The formula result should be $400.

Tab over again and type in the following formula to calculate the amount of your monthly payment that is going toward interest: "=(.14/12)*A2" (again, no quotation marks). In this example, the result should be $116.67.

Finally, tab over once more---you should be at cell D2 at this point---and type in "=B2-C2" to get an automatic calculation of the amount of principal that you will be paying down with that payment. The result should be $283.33 to demonstrate our example.

Press "Enter" once all of your formulas are set to bring yourself to cell A3. Now, type in just one more formula, "=A2-D2" into cell A3. This formula will automatically calculate your new balance after you make a monthly payment.

Select cell B2, which is $400 in this example, grab the tiny square in the lower-right corner of the cell and drag it down with your mouse into cell B3. A calculation should occur, showing you your new minimum payment for that month. Do the same thing for cells C2 and D2.

Select the entire third row with your mouse, find the tiny square again in the corner and then drag everything down as many rows as you'd like to see your minimum payments into eternity (each row represents a month). Plug your own credit card interest rate and minimum payment percentage into the first line of this Excel sheet before dragging anything down.

Source: ehow.com

Category: Bank