1. What is the Credit Card Payoff Equation?

The credit card payoff equation estimates how long it will take to pay off credit card debt in Ontario, Canada given your current balance, monthly payment, and interest rate. It accounts for compound interest to provide an accurate timeline.

2. How Does the Calculator Work?

The calculator uses the credit card payoff equation:

Where:

• \( P \) — Principal balance (CAD)
• \( D \) — Monthly payment (CAD)
• \( R \) — Monthly interest rate (APR / 12, as a decimal)
• \( T \) — Time to payoff (months)

Explanation: The equation calculates how many months it will take to reduce the balance to zero given regular payments and compound interest.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, budgeting, and evaluating whether you should increase payments or consider balance transfer options.

4. Using the Calculator

Tips: Enter your current credit card balance in CAD, your planned monthly payment in CAD, and your annual percentage rate (APR). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is my payoff time so long?
A: High interest rates relative to your payment amount can dramatically extend payoff time. Consider increasing payments or negotiating a lower rate.

Q2: What's the minimum payment to actually pay off debt?
A: Your payment must exceed the monthly interest charge (P × R). Otherwise, you'll never pay off the principal.

Q3: How does this apply specifically to Ontario?
A: While the math is universal, this calculator uses CAD currency and accounts for typical Canadian credit card interest rates.

Q4: Does this include fees or other charges?
A: No, this calculates based on interest only. Late fees or other charges would extend payoff time.

Q5: How accurate is this estimate?
A: Very accurate assuming fixed payments and interest rate. Variable rates or changing payments would affect actual payoff time.