1. What is the Minimum Payment Calculator?

The Bankrate Minimum Payment Calculator estimates how long it will take to pay off credit card debt making only minimum payments, using Bankrate's methodology. It shows the impact of interest on debt repayment.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( P \) — Principal balance ($)
• \( MP \) — Minimum payment ($)
• \( R \) — Monthly interest rate (APR / 12 as decimal)
• \( T \) — Time to pay off (months)

Explanation: The equation calculates how many months it would take to pay off the balance making only minimum payments, accounting for compound interest.

3. Importance of Minimum Payment Calculation

Details: Understanding minimum payment timelines helps consumers realize how long debt will persist and the true cost of carrying credit card balances.

4. Using the Calculator

Tips: Enter your current credit card balance, minimum payment amount (typically 1-3% of balance), and the card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does paying only minimums take so long?
A: Minimum payments mostly cover interest initially, with little going toward principal. This creates a cycle of long-term debt.

Q2: How accurate is this calculator?
A: It provides a good estimate assuming fixed APR and consistent minimum payments. Actual terms may vary with rate changes.

Q3: What's a better strategy than minimum payments?
A: Paying more than the minimum significantly reduces payoff time and interest paid. Even small additional amounts help.

Q4: Does this account for late fees or other charges?
A: No, this calculates ideal conditions without fees or additional charges.

Q5: What if my minimum payment changes?
A: If your balance decreases, minimum payments typically decrease too, which would extend the payoff timeline further.