This calculator will compute an interest-only loan's accumulated interest at various durations throughout the year. These amounts reflect the amount which would need to be paid in order to maintain a constant principal balance.
We also have calculators which you can use to amoritize loans over any desired schedule.
The above calculator also has a second tab which shows the current interest rates on savings accounts. This further shows how expensive debt is because most forms of consumer debt charge a far higher rate of interest than banks pay savers AND savers get taxed on interest income they earn at their ordinary tax rates. The table below shows the full cost of $10,000 of debt at various rates of interest. While different consumer debt types typically have different amounts, we kept the amount column constant to show the absolute difference in cost per Dollar earned or borrowed. We also presumed interest-only payments on the debt & a 25% tax rate on income.
|Account Type||Amount||Rate||Annual Interest||After Tax Income||Required Income to Cover Interest Expense|
|Big Bank Savings||$10,000||0.01%||$1||$0.75||-|
|Certificate of Deposit||$10,000||1.40%||$140||$105.00||-|
|New Car, Good Credit||$10,000||3.65%||$365||-||$486.67|
|Used Car, Bad Credit||$10,000||8.90%||$890||-||$1,186.67|
|Personal Loan, Good Credit||$10,000||14.5%||$1,450||-||$1,933.33|
|Personal Loan, Bad Credit||$10,000||30.0%||$3,000||-||$4,000|
Rates are still low.