1. What is the Minimum Payment Estimator?

The Credit Card Minimum Payment Estimator calculates how long it will take to pay off your credit card balance if you only make the minimum payments each month. It considers your principal balance, minimum payment amount, and annual interest rate (APR).

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The formula calculates how many months it would take to pay off the debt making only minimum payments, accounting for compound interest.

3. Importance of Understanding Minimum Payments

Details: Making only minimum payments can significantly extend the time to pay off debt and increase total interest paid. This calculator helps visualize the long-term impact of minimum payments.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (or percentage of balance if that's how your card calculates it), and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does it take so long to pay off with minimum payments?
A: Minimum payments are typically small (often 1-3% of balance) and mostly go toward interest in the early years, not reducing principal.

Q2: What if my minimum payment is a percentage of balance?
A: Convert the percentage to a dollar amount based on your current balance for this calculation.

Q3: How can I pay off my credit card faster?
A: Pay more than the minimum whenever possible, even small additional amounts can significantly reduce payoff time.

Q4: Does this account for changing interest rates?
A: No, this assumes a fixed APR. If your rate changes, recalculate with the new rate.

Q5: What does "Never" mean in the results?
A: This means your minimum payment doesn't cover the monthly interest, so your balance would grow indefinitely.