1. What is the Credit Card Payoff Formula?

The credit card payoff formula calculates how long it will take to pay off a credit card balance given a fixed monthly payment and interest rate. It helps compare different credit card deals by showing the time to payoff under different interest rates.

2. How Does the Calculator Work?

The calculator uses the credit card payoff 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 the compounding effect of interest on your remaining balance each month.

3. Importance of Comparing Credit Card Deals

Details: Even small differences in APR can significantly impact how long it takes to pay off debt. This calculator helps visualize those differences to make informed financial decisions.

4. Using the Calculator

Tips: Enter your current balance, planned monthly payment, and the APRs of the cards you're comparing. The calculator will show how many months (and years) it will take to pay off each card.

5. Frequently Asked Questions (FAQ)

Q1: Why does a lower APR save so much time?
A: With lower interest, more of your payment goes toward the principal rather than interest, accelerating payoff.

Q2: What if I can't make the minimum payment?
A: The calculator assumes fixed payments. If payments vary, results will differ.

Q3: Does this account for balance transfers?
A: No, this calculates payoff time for existing balances. Balance transfers may have different terms.

Q4: How accurate is this calculator?
A: It's mathematically precise for fixed payments and interest rates, but actual results may vary slightly due to billing cycles.

Q5: Should I pay more than the minimum?
A: Yes! Increasing payments reduces payoff time and total interest paid significantly.