Credit Card Offer Comparison Calculator

Time to Pay Off Formula:

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

Principal Balance (P):

Monthly Payment (D):

Card 1 APR:

Card 2 APR:

Card 1 Payoff Time:

Card 2 Payoff Time:

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1. What is the Credit Card Payoff Calculator?

The Credit Card Offer Comparison Calculator helps you compare how long it will take to pay off your credit card balance under different APR offers, given your current balance and monthly payment amount.

2. How Does the Calculator Work?

The calculator uses the following formula:

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

Where:

$ P $ — Principal balance ($)
$ D $ — Monthly payment ($)
$ R $ — Monthly interest rate (APR / 12)
$ T $ — Time to payoff (months)

Explanation: The formula calculates how many months it will take to pay off a credit card balance when making fixed monthly payments, accounting for compound interest.

3. Importance of Comparing Credit Card Offers

Details: Even small differences in APR can significantly impact how long it takes to pay off your balance and how much interest you'll pay overall. This calculator helps visualize those differences.

4. Using the Calculator

Tips: Enter your current credit card balance, the monthly payment you can afford, and the APRs of two different credit card offers you're comparing. The calculator will show how long it would take to pay off the balance under each offer.

5. Frequently Asked Questions (FAQ)

Q1: Why does APR make such a big difference?
A: Higher APRs mean more of your payment goes toward interest rather than principal, extending the payoff time significantly, especially for large balances.

Q2: What if I can't make the minimum payment?
A: This calculator assumes fixed payments. If you're only making minimum payments (which often decrease as balance decreases), payoff time will be much longer.

Q3: Does this account for balance transfers?
A: No, this calculates payoff time for existing balances. Balance transfer fees and promotional rates would require different calculations.

Q4: What's the best strategy to pay off credit cards?
A: Pay as much as you can afford each month. Consider paying off higher APR cards first (avalanche method) or smallest balances first (snowball method) for psychological wins.

Q5: How accurate is this calculator?
A: It provides a mathematical estimate assuming fixed payments and consistent APR. Actual payoff may vary slightly due to rounding in real credit card statements.