Credit Card Calculator Comparison Tool

Credit Card Payoff Formula:

\[ T = \frac{\log\left(\frac{P}{P - D \times R}\right)}{\log(1 + R)} \]

Number of Credit Cards:

Card 1

Principal Balance (P):

Monthly Payment (D):

APR (Annual Rate):

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1. What is the Credit Card Payoff Calculator?

The Credit Card Calculator Comparison Tool helps you compare how long it will take to pay off multiple credit card balances based on your current payments and interest rates. This allows you to strategize which cards to prioritize for faster debt elimination.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

\[ T = \frac{\log\left(\frac{P}{P - D \times R}\right)}{\log(1 + R)} \]

Where:

\( P \) — Principal balance on the card
\( D \) — Monthly payment amount
\( R \) — Monthly interest rate (APR / 12)
\( T \) — Time to payoff in months

Explanation: The formula calculates how many months it will take to pay off a credit card balance given a fixed monthly payment and interest rate.

3. Importance of Payoff Comparison

Details: Comparing payoff times helps you understand which debts are costing you the most in interest and which should be prioritized in your repayment strategy (avalanche vs. snowball method).

4. Using the Calculator

Tips: Enter the balance, monthly payment, and APR for each credit card you want to compare. The calculator will show you how long each will take to pay off and the total amount you'll pay.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to be greater than the monthly interest?
A: If your payment only covers the interest (D ≤ P×R), you'll never pay off the principal. The payment must exceed the monthly interest to reduce the balance.

Q2: What's the difference between APR and monthly rate?
A: APR is the annual rate. Divide by 12 to get the monthly rate used in calculations (R = APR/12).

Q3: How accurate is this calculator?
A: It assumes fixed payments and interest rates. Real-world factors like changing rates or minimum payments may affect actual payoff time.

Q4: Should I pay off high-interest or small-balance cards first?
A: Mathematically, targeting high-interest cards first (avalanche method) saves the most money, while paying small balances first (snowball method) can provide psychological wins.

Q5: Can I include balance transfer cards?
A: Yes, but remember to account for any promotional rates that may expire, which would change the APR and payoff time.