1. What is the Bankrate Amortization Calculator?

The Bankrate Amortization Calculator generates a detailed repayment schedule for loans or credit cards, showing how each payment is split between principal and interest over time.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

• Outstanding Balance — Remaining principal at start of month
• R — Monthly interest rate (annual rate / 12, as a decimal)
• EMI — Equated Monthly Installment (fixed payment amount)

Explanation: Early payments consist mostly of interest, while later payments apply more to principal.

3. Importance of Amortization Schedule

Details: Understanding amortization helps borrowers see the true cost of loans, plan prepayments, and compare loan options effectively.

4. Using the Calculator

Tips: Enter loan amount, annual interest rate, and loan term in years. The calculator will show monthly payment, total interest, and full repayment schedule.

5. Frequently Asked Questions (FAQ)

Q1: How does extra payment affect amortization?
A: Extra payments reduce principal faster, shortening loan term and reducing total interest paid.

Q2: What's the difference between fixed and variable rate amortization?
A: Fixed-rate loans have constant payments; variable-rate loans may have changing payments if interest rates change.

Q3: Why does most early payment go toward interest?
A: Interest is calculated on outstanding balance, which is highest at the beginning of the loan term.

Q4: How accurate is this calculator?
A: It provides standard amortization calculations, but actual loan terms may include additional fees or features.

Q5: Can this be used for credit cards?
A: Yes, if you know your fixed payment amount and interest rate, though credit cards typically have revolving balances.