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Time to Pay Off Formula:
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This calculator estimates how long it will take to pay off your credit card debt in Australia if you only make the minimum payments each month. It accounts for your current balance, minimum payment amount, and annual interest rate.
The calculator uses the following formula:
Where:
Explanation: The formula calculates how many months it will take to pay off the debt when making only minimum payments, considering compound interest.
Details: Understanding how long it takes to pay off debt with minimum payments helps consumers realize the true cost of carrying credit card balances and the benefits of paying more than the minimum.
Tips: Enter your current credit card balance, the minimum payment amount (typically 2-3% of balance in Australia), and your annual interest rate. All values must be positive numbers.
Q1: Why does it take so long to pay off with minimum payments?
A: Minimum payments are designed to mostly cover interest with only a small portion reducing principal, leading to long payoff periods.
Q2: What's a typical minimum payment in Australia?
A: Most Australian credit cards require minimum payments of 2-3% of the balance or $10-25, whichever is greater.
Q3: How can I pay off my credit card faster?
A: Pay more than the minimum, make fortnightly instead of monthly payments, or consider a balance transfer to a lower-interest card.
Q4: Does this calculator account for fees?
A: No, it only considers interest charges. Actual payoff time may be longer if your card has annual or late fees.
Q5: What if my minimum payment changes?
A: This calculator assumes fixed minimum payments. If your minimum payment percentage changes, the actual payoff time may differ.