1. What is the Minimum Repayment Calculation?

The minimum repayment calculation estimates how long it will take to pay off credit card debt making only the minimum payments each month. This calculation shows the true cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula accounts for compound interest and the decreasing balance as minimum payments are made each month.

3. Importance of Minimum Payment Calculation

Details: Understanding how long it takes to pay off debt with minimum payments helps consumers make informed decisions about credit card use and debt repayment strategies.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (or percentage converted to dollars), and your card's annual percentage rate (APR).

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 2-3% of balance), so most of your payment goes toward interest rather than reducing principal.

Q2: What if I pay more than the minimum?
A: Paying even slightly more than the minimum can significantly reduce payoff time and total interest paid.

Q3: Why does my calculation show an error?
A: This happens when your minimum payment doesn't cover the monthly interest, meaning you'd never pay off the debt.

Q4: Are there limitations to this calculation?
A: It assumes fixed interest rate and consistent minimum payments. Some cards calculate minimum payments differently.

Q5: How can I pay off my debt faster?
A: Consider debt repayment strategies like the avalanche or snowball methods, or balance transfer to lower-interest cards.