New credit card regulations in the U.S. will take effect on July 1st, 2010. Basically, credit card issuers must require higher minimum payments to shorten the customer's payback time when the customer elects to make only the minimum payment each month. This Demonstration computes a payment schedule for given credit card loan parameters and provides a comparison of the payback times for a set of different minimum payment amounts.
To ensure the credit card loan can be repaid at some time, the minimum payment switches from the minimum payment percentage (applied to the outstanding balance) to a fixed minimum payment amount, when this percentage-based minimum payment is lower than the minimum payment amount specified by the user.
Principal is the original outstanding loan amount. APR is the annual percentage rate that the credit card company charges the customer. Minimum percent is the percentage of the outstanding balance that is required to be repaid at a minimum, as long as it is still larger than the minimum payment amount. Minimum payment is the (fixed) minimum payment amount to be repaid when the percentage-based minimum payment becomes lower.