1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off your Australian credit card debt based on your current balance, monthly payment, and interest rate. It helps you understand the impact of different payment strategies.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( P \) — Principal balance (AUD)
• \( D \) — Monthly payment (AUD)
• \( R \) — Monthly interest rate (annual rate / 12, as a decimal)
• \( T \) — Time to payoff (months)

Explanation: The formula calculates how many months it will take to pay off the debt given fixed monthly payments and compound interest.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, shows the true cost of minimum payments, and motivates debt reduction strategies.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why does my credit card never seem to get paid off?
A: If your monthly payment is less than the interest charged each month, your balance will never decrease - this calculator will show "Never" in this case.

Q2: How can I pay off my credit card faster?
A: Increase your monthly payment amount, reduce your interest rate (consider balance transfers), or make bi-weekly instead of monthly payments.

Q3: Are there any fees included in this calculation?
A: No, this calculates only the principal and interest. Late fees or other charges would affect actual payoff time.

Q4: What's a good monthly payment amount?
A: Pay as much above the minimum as possible. A good target is at least 2-3% of your balance plus all new charges.

Q5: Does this work for multiple credit cards?
A: No, this calculates for a single card. For multiple cards, calculate each separately or consider using the debt avalanche/snowball method.