Worked examples / Putting it off

Wait to pay off a credit card

A $2,000 balance at 1.8% a month, left for a year while the money sits in savings at 4%.

Waiting costs you

Putting it off for 12 months costs you $397.

Deal with it now$2,000for certain

Put it off$2,397on average

For every $1 you put off, you pay $1.20.
Left alone it grows from $2,000 to $2,477. Each month's growth is added to the last, so it multiplies.
Keeping the money earns you $80 meanwhile, which is already counted.

Put in your own numbers

This is a worked example with illustrative figures, not data about any real person or company. Change any of them in the calculator and the answer changes with them.

How this answer was worked out

Cost later	$2,000 x (1 + 1.8%) ^ 12 = $2,477
Expected later	100% x $2,477 + 0% x $0 = $2,477
Carrying cost	$0 x 12 = $0
Earned by waiting	$2,000 x 4% x 12 / 12 = $80
Putting it off costs	$2,477 + $0 - $80 = $2,397
Waiting costs you	$2,397 - $2,000 = $397
Per $1 put off	$1.20

Every formula is written out on the formulas page.

What the calculator asks you

The balance today
Months you would leave it
Chance it turns into something bigger meanwhile
What the bigger problem would cost
Interest each month
What waiting costs you each month meanwhile
Yearly rate your savings earn

Open the calculator

How this answer was worked out

What the calculator asks you

Related