1. What is the Credit Card Payoff Formula?

The credit card payoff formula estimates how long it will take to pay off credit card debt based on your current balance, monthly payment, and interest rate. It accounts for compound interest and helps you understand the true cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

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

Explanation: The formula calculates how many months it will take to pay off the debt by considering the compounding effect of interest on your remaining balance each month.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, debt management, and evaluating whether you should increase payments or consider balance transfers to lower-interest cards.

4. Using the Calculator

Tips: Enter your current credit card balance in INR, your fixed monthly payment amount in INR, and your annual percentage rate (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 the interest (or less), your principal will never decrease and you'll never pay off the debt.

Q2: What's a typical credit card APR in India?
A: Rates typically range from 24% to 48% annually (2% to 4% monthly). Check your card statement for your exact rate.

Q3: How can I pay off my card faster?
A: Increase monthly payments, make bi-weekly payments instead of monthly, or transfer to a lower-interest card.

Q4: Does this account for minimum payments?
A: No, this assumes fixed payments. Minimum payments often extend payoff time dramatically.

Q5: What if I make additional payments?
A: Extra payments will reduce payoff time. Recalculate with your new higher payment amount.