1. What is the Credit Card Payoff Formula?

The credit card payoff formula estimates time to pay off credit card debt in Canada. It calculates how many months it will take to pay off your balance based on your principal, monthly payment, and interest rate.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

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 formula accounts for compound interest and calculates how long it will take to reduce the balance to zero with regular payments.

3. Importance of Payoff Calculation

Details: Knowing your payoff timeline helps with financial planning, debt management, and understanding the true cost of carrying credit card debt.

4. Using the Calculator

Tips: Enter principal balance in CAD, monthly payment in CAD, and annual interest rate (APR) as a percentage. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if my payment is too low to pay off the debt?
A: The calculator will show "Infinite" if your payment doesn't cover the monthly interest charges.

Q2: Does this account for minimum payments?
A: No, it assumes fixed payments. Minimum payments typically extend payoff time significantly.

Q3: How accurate is this calculation?
A: It's mathematically precise for fixed payments and interest rates, but actual results may vary with changing rates or payments.

Q4: Can I use this for other types of loans?
A: This formula works best for credit cards. Mortgages and car loans may use different amortization methods.

Q5: How can I pay off debt faster?
A: Increase monthly payments, reduce spending, or consider balance transfers to lower-interest cards.