1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off a credit card balance using Bankrate's methodology. It considers your current balance, monthly payment amount, and annual percentage rate (APR) to calculate the payoff timeline.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The formula accounts for compound interest and calculates how many months it will take for regular payments to reduce the balance to zero.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, debt management, and evaluating different repayment strategies.

4. Using the Calculator

Tips: Enter your current balance, planned monthly payment, and credit card APR. All values must be positive numbers. The payment must be greater than the monthly interest charge to pay down the balance.

5. Frequently Asked Questions (FAQ)

Q1: Why does my balance never decrease?
A: If your monthly payment is less than the monthly interest charge, your balance will grow rather than decrease.

Q2: How can I pay off my card faster?
A: Increase your monthly payment amount or reduce your APR through balance transfers or negotiating with your issuer.

Q3: Does this account for minimum payments?
A: This calculator works with any payment amount, but minimum payments typically result in very long payoff times.

Q4: What if I make additional payments?
A: Additional payments will shorten the payoff time. Recalculate with your new higher payment amount.

Q5: Does this work for other types of loans?
A: The formula works for any fixed-rate debt with compound interest, though mortgage calculations are typically more complex.