1. What is the Credit Card Payoff Calculator?

The Credit Card Payoff Calculator estimates how long it will take to pay off your credit card balance based on your average daily balance, monthly payment, and annual interest rate (APR).

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( ADB \) — Average Daily Balance ($)
• \( D \) — Monthly Payment ($)
• \( R \) — Monthly Interest Rate (APR / 12, as decimal)
• \( T \) — Time to Payoff (months)

Explanation: The formula calculates how many months it will take to pay off the balance when making fixed monthly payments, accounting for compound interest.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, debt management, and evaluating different payment strategies to reduce interest costs.

4. Using the Calculator

Tips: Enter your current average daily balance, the fixed monthly payment you plan to make, and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if my payment is less than the interest accrued each month?
A: The calculator will show "Infinite" because you'll never pay off the debt with that payment amount.

Q2: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rate. Actual results may vary with changing balances or rates.

Q3: Should I include new purchases in my calculations?
A: For most accurate results, use this calculator with your current balance and stop using the card for new purchases.

Q4: How can I pay off my debt faster?
A: Increase your monthly payment, reduce your APR (through balance transfers or negotiation), or make bi-weekly instead of monthly payments.

Q5: Does this work for other types of loans?
A: This specific formula is for credit cards. Other loans may use different amortization methods.