1. What is the Credit Card Payoff Formula?

The credit card payoff formula calculates how long it will take to pay off a credit card balance based on your current principal, monthly payment, and interest rate. This helps you understand the true cost of carrying a balance and plan your finances accordingly.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

• \( P \) — Principal balance (ZAR)
• \( D \) — Monthly payment (ZAR)
• \( R \) — Monthly interest rate (APR / 12)
• \( T \) — Time to payoff (months)

Explanation: The formula accounts for compound interest and shows how increasing your monthly payment can dramatically reduce payoff time.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with budgeting, debt management, and avoiding unnecessary interest payments. It reveals the true cost of minimum payments.

4. Using the Calculator

Tips: Enter your current credit card balance, your planned monthly payment, and the card's annual interest rate. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to exceed the monthly interest?
A: If your payment only covers interest (P × R), your principal never decreases and you'll never pay off the debt.

Q2: How can I pay off my card faster?
A: Increase monthly payments, make bi-weekly payments, or transfer to a lower-rate card.

Q3: Does this include fees or other charges?
A: No, this calculates based on interest only. Late fees or other charges would extend payoff time.

Q4: What's a good monthly payment amount?
A: Pay as much above the minimum as possible. Even small increases can save significant interest.

Q5: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and rates. Actual payoff may vary with rate changes or payment adjustments.