Calculate credit cost, total credit amount, credit rate, or credit period from simple interest when you enter any 3 of the 4 values.
Credit Cost Formula
The credit cost calculator uses the simple interest formula. It treats the credit rate as an annual percentage rate and the credit period as a number of years.
CC = TCA * (CR/100) * CP
- CC = credit cost, in dollars
- TCA = total credit amount, in dollars
- CR = credit rate, as an annual percent
- CP = credit period, in years
If you leave the credit cost blank, the calculator solves for the cost of borrowing:
CC = TCA * (CR/100) * CP
If you leave the total credit amount blank, the calculator rearranges the formula to solve for the borrowed amount:
TCA = CC / ((CR/100) * CP)
If you leave the credit rate blank, the calculator solves for the annual credit rate:
CR = (CC / (TCA * CP)) * 100
If you leave the credit period blank, the calculator solves for the time period in years:
CP = CC / (TCA * (CR/100))
Enter any three values and leave the unknown value empty. The calculator then applies the matching rearranged formula.
Credit Period Conversions
The credit period must be entered in years. Use these common conversions when the borrowing term is given in months.
| Credit Period | Enter as Years |
|---|---|
| 3 months | 0.25 |
| 6 months | 0.5 |
| 9 months | 0.75 |
| 12 months | 1 |
| 18 months | 1.5 |
| 24 months | 2 |
| 36 months | 3 |
Example Credit Cost Calculations
Example 1: Find the credit cost
You borrow $5,000 at a 9% annual credit rate for 2 years.
CC = 5000 * (9/100) * 2
CC = 900
The credit cost is $900.
Example 2: Find the credit rate
The total credit amount is $8,000, the credit cost is $1,200, and the credit period is 3 years.
CR = (1200 / (8000 * 3)) * 100
CR = 5
The annual credit rate is 5%.
FAQ
What does credit cost mean?
Credit cost is the dollar amount you pay for using borrowed money. In this calculator, it is based on simple interest, so it depends on the total credit amount, the annual credit rate, and the length of time the credit is used.
Does this calculate compound interest?
No. This calculator uses simple interest only. It does not compound interest monthly, daily, or annually. If interest compounds, the final cost may be different from the result shown here.
Why do I need to leave one field blank?
The calculator solves for one unknown value at a time. Enter three values and leave the value you want to calculate empty. If more than one field is blank, there is not enough information to solve the formula.
