1. What is the Credit Card Payment Calculator?

This calculator estimates time to pay off credit card debt for mortgage-related payments, using Discover's methodology. It helps you understand how long it will take to become debt-free based on your current payment strategy.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The formula calculates how many months it will take to pay off your credit card debt based on your current principal, monthly payment, and interest rate.

3. Importance of Payment Calculation

Details: Understanding your payoff timeline helps in financial planning, especially when preparing for mortgage applications where credit card debt can impact your eligibility and terms.

4. Using the Calculator

Tips: Enter your current credit card balance, the fixed monthly payment you can afford, and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to exceed the monthly interest?
A: If your payment only covers interest (or less), your principal will never decrease, resulting in infinite payoff time.

Q2: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual results may vary with changing rates or payment amounts.

Q3: Should I include minimum payments?
A: For fastest payoff, calculate with payments higher than the minimum. Minimum payments typically result in much longer payoff periods.

Q4: How does this relate to mortgage applications?
A: Lenders consider your debt-to-income ratio. Paying off credit cards before applying can improve your mortgage terms.

Q5: Can I use this for other types of debt?
A: While designed for credit cards, it works for any fixed-rate installment debt with consistent payments.