Definitions

Credit cards

Enter one total credit card debt and its average interest rate, or press the "Details" button to enter details for up up to 10 credit card accounts, one on each line.

Car loans

Click on the "Details" button to enter any car loans that you may have. The details page is designed to let you enter your current monthly payment, the term (in months), the starting balance and the number of months remaining until the loan is discharged. It then calculates the outstanding balance and interest rate. You can enter up to three current car loans.

Other loans

Click on the "Details" button to enter any other loans you currently have in the details page. This page is designed to let you enter your current monthly payment, the term (in months), the starting balance and the number of months remaining until the loan is discharged. It then calculates your outstanding balance and interest rate. You can enter details for up to six loans.

Totals

The sum of the balances for each of the loans entered (i.e. Totals = credit card/s + car loan/s + other loan/s).

Interest rates

The average annual percentage rate you pay. This interest rate is calculated for each of the categories of debt you have including credit cards, car loans and other loans. For credit cards, the rate you enter is used to calculate the interest on all future credit card payments. The length of time to pay off this credit card may be much greater than calculated if you enter a low promotional interest rate that is only good for a short period of time.

Payment

This is the initial monthly payment. For credit cards, if you checked the "use credit card minimum payments" box on the details page, your monthly payment is calculated as 2% of your current outstanding balance. With the "use credit card minimum payments" box checked, your monthly payment will decrease as your balance is paid down. This can greatly increase the length of time it takes to pay off your credit cards. Uncheck this box to enter your own monthly payment that will remain the same until your balance is paid in full.

Note: For credit cards we calculate your minimum monthly as 2% of your current outstanding balance or $10 whichever is the greater. While your actual minimum monthly payment may be slightly different, say 3%, this is one of the most common methods used by credit card companies to calculate minimum payments. The defaults for this option can be changed as required.

Loan balance

This is the total loan amount you require to consolidate the current individual debts entered in each of the debt categories. This amount must be at least equal to your total outstanding debt plus any fees. If you choose to receive a larger loan amount than your outstanding debt, plus any fees, the additional amount is added to the starting balance of your investment.

Loan term

The length of time you will repay this loan. The investment timeframe for this calculator also uses the loan term. This duration can be from one (1) to thirty (30) years.

Loan interest rate

The annual interest rate you are charged for this loan. The calculator assumes that your payments are made monthly and that interest is compounded monthly.

Percentage to invest

This is the percentage of your monthly payment savings you wish to invest. Any remaining payment savings is used to repay your loan. For example, if you have a monthly payment savings of $100 and choose to invest 75%, $75 would be invested and $25 would be an additional amount applied to your loan balance.

Rate of return

This is the annual rate of return you expect from your investment. The actual rate of return is largely dependent on the type of investments you select. For example, the ASX 300 has returned an average of 10.64% annually since its inception. Alternatively, a savings account at a bank can pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.