Credit Card Minimum Payment Calculator Canada Ontario

Minimum Payment Formula:

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

Time to Pay Off:

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1. What is the Minimum Payment Calculator?

This calculator estimates how long it will take to pay off your credit card debt making only minimum payments in Ontario, Canada. It considers your principal balance, minimum payment amount, and annual interest rate.

2. How Does the Calculator Work?

The calculator uses the following formula:

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

Where:

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

Explanation: The formula calculates how many months it will take to pay off the debt when making fixed minimum payments that include both principal and interest.

3. Importance of Calculating Payoff Time

Details: Understanding how long it takes to pay off credit card debt with minimum payments helps consumers make informed decisions about debt repayment strategies and the true cost of carrying balances.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (typically 3-5% of balance in Canada), and your annual interest rate (APR). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical minimum payment in Canada?
A: Most Canadian credit cards require minimum payments of 3-5% of the outstanding balance or $10 (whichever is greater).

Q2: Why does it take so long to pay off with minimum payments?
A: Minimum payments are mostly interest in early stages, with little principal reduction, leading to long payoff periods.

Q3: How accurate is this calculator?
A: It provides a good estimate assuming fixed interest rates and consistent minimum payments. Actual results may vary if rates change.

Q4: What if my minimum payment changes?
A: The calculator assumes fixed minimum payments. If your payments decrease as your balance decreases, payoff time may be longer.

Q5: How can I pay off my debt faster?
A: Paying more than the minimum, making biweekly payments, or transferring to a lower-interest card can significantly reduce payoff time.