The next time you want to splurge on some big ticket item, you might want to head over to The Real Damage first to see what it’s going to actually cost you in the long run. The free online tool looks at your current balances and interest rates, as well as your monthly payments, and then approximates how much extra you’ll pay in interest on your new purchase before you’re totally debt free.
In the FAQ, the developer explains how the site calculates the interest:
The calculation uses minimum payments based on paying off a percentage of the balance. For example, an amount of $75 with a apr of 15 and a balance of $1200 with the minimum payment calculated by “Interest + 1% Balance” gives a Real Damage value of $168.75. The same Real Damage value would be given if the balance were $1500. Whether you owe $1200 or $1500, the same number of payments would be required when you calculate “15% apr of balance” + “1% of balance”. However, variables such as minimum payment calculation, APR and additional payments would effect the resulting Real Damage.
It may not be a perfect prediction, but it’s a quick and free way to re-frame a purchasing decision by undercutting any emotional “It’s only X dollars!” thinking.