1. What is the Credit Card Payoff Calculator?

This calculator estimates the time needed to pay off credit card debt when making extra payments that would otherwise be used for mortgage payments. It helps compare debt payoff strategies.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( P \) — Principal balance ($)
• \( E \) — Extra payment amount ($)
• \( D \) — Monthly payment ($)
• \( R \) — Monthly interest rate (APR / 12)
• \( T \) — Time to payoff (months)

Explanation: The formula calculates how long it will take to pay off debt when applying extra payments, accounting for compound interest.

3. Importance of Payoff Calculation

Details: Understanding payoff timelines helps in financial planning, comparing debt reduction strategies, and making informed decisions about allocating extra payments.

4. Using the Calculator

Tips: Enter all values in dollars except APR (percentage). Ensure extra payment plus regular payment exceeds interest charges for payoff to occur.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate payoff time with extra payments?
A: It shows the impact of redirecting mortgage payments to credit card debt, which typically has higher interest rates.

Q2: What's a good extra payment amount?
A: Any amount helps, but paying at least the difference between mortgage and rent payments can significantly reduce payoff time.

Q3: Does this account for minimum payments?
A: The calculator uses your specified monthly payment amount, which should be greater than the minimum payment.

Q4: What if I can't make extra payments consistently?
A: The calculation assumes consistent payments. Irregular payments will extend the payoff period.

Q5: Should I prioritize credit card or mortgage debt?
A: Generally prioritize higher-interest debt first (usually credit cards), but consult a financial advisor for your specific situation.