1. What is Credit Card Amortization?

Credit card amortization shows how each payment is split between interest and principal reduction over time. Understanding this helps borrowers see the true cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• Outstanding Balance — Remaining principal at start of month ($)
• R — Monthly interest rate (APR / 12, as a decimal)
• D — Monthly payment ($)

Explanation: Each payment first covers the interest due, with the remainder applied to reduce the principal.

3. Importance of Understanding Amortization

Details: Seeing how payments are applied helps borrowers understand why paying more than the minimum payment significantly reduces total interest paid and payoff time.

4. Using the Calculator

Tips: Enter your current credit card balance, APR, and your planned monthly payment. The calculator will show how long it will take to pay off and the total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: Interest is calculated on the outstanding balance, which is highest at the beginning, so early payments are mostly interest.

Q2: How can I pay off my credit card faster?
A: Increasing your monthly payment reduces the principal faster, which in turn reduces future interest calculations.

Q3: What happens if I make only minimum payments?
A: Minimum payments often barely cover interest, resulting in very slow principal reduction and much higher total interest paid.

Q4: Does this calculator account for variable APRs?
A: No, it assumes a fixed APR. For variable rates, results may differ from actual payments.

Q5: Should I use this for other types of loans?
A: This is designed for credit cards. Mortgages and other loans may use different calculation methods.