1. What is Bankrate's Credit Card Payoff Formula?

The Bankrate credit card payoff formula calculates how long it will take to pay off credit card debt when making fixed monthly payments, taking into account the principal balance, monthly payment amount, and annual percentage rate (APR).

2. How Does the Calculator Work?

The calculator uses Bankrate's 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 Credit Card Payoff Calculation

Details: Understanding payoff time helps consumers make informed decisions about debt repayment strategies and compare different payment options.

4. Using the Calculator

Tips: Enter principal balance in dollars, monthly payment amount in dollars, and APR as a percentage. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payoff time show as infinite?
A: This happens when your monthly payment is less than or equal to the monthly interest charges, meaning you'll never pay off the debt.

Q2: How accurate is this calculation?
A: It assumes fixed payments and interest rate, and no additional charges. Real-world results may vary slightly.

Q3: What's the minimum payment needed to pay off debt?
A: Your payment must exceed the monthly interest (P × R) to eventually pay off the debt.

Q4: How can I pay off debt faster?
A: Increase monthly payments, make biweekly payments, or transfer to a lower-interest card.

Q5: Does this work for other types of loans?
A: The formula works for any fixed-rate, fixed-payment amortizing debt, though mortgage calculations often include additional factors.