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EMI Formula:
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EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's commonly used for loans and credit card refinancing to make debt repayment more manageable.
The calculator uses the EMI formula:
Where:
Explanation: The formula calculates the fixed monthly payment that would pay off the loan over its term, including both principal and interest components.
Details: Credit cards typically have high interest rates (15-25% APR). Refinancing to a personal loan with lower interest can save significant money and help pay off debt faster with fixed monthly payments.
Tips: Enter the amount you want to refinance, the better annual interest rate you qualify for, and the repayment period in months. The calculator will show your monthly payment and total cost.
Q1: How much can I save by refinancing credit card debt?
A: Savings depend on your current APR and the refinance rate. For example, refinancing $10,000 from 20% APR to 10% APR over 3 years could save about $1,600 in interest.
Q2: What's a good refinance rate for credit card debt?
A: Rates vary by credit score. Generally, anything below 15% is better than most credit cards. Excellent credit may qualify for rates under 10%.
Q3: Does refinancing hurt my credit score?
A: There may be a small temporary dip from the credit inquiry, but reducing credit utilization and making on-time payments will improve your score over time.
Q4: Should I choose a shorter or longer repayment term?
A: Shorter terms mean higher monthly payments but less total interest. Choose the shortest term you can comfortably afford.
Q5: Are there fees for refinancing credit card debt?
A: Some lenders charge origination fees (1-6% of loan amount). Factor these into your total cost when comparing options.