1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off credit card debt using NerdWallet's methodology. It considers your principal balance, monthly payment, and annual interest rate (APR) to calculate the payoff time.

2. How Does the Calculator Work?

The calculator uses NerdWallet's payoff time formula:

Where:

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

Explanation: The formula calculates how many months it will take to pay off debt by accounting for the compounding interest and your fixed monthly payment.

3. Importance of Payoff Calculation

Details: Knowing your payoff timeline helps with financial planning, understanding the true cost of debt, and motivating debt repayment strategies.

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 never decreases and the debt can't be paid off.

Q2: What's a good monthly payment to pay off debt quickly?
A: Ideally, pay more than the minimum - at least 2-3% of your balance plus all accrued interest.

Q3: How does APR affect payoff time?
A: Higher APR dramatically increases payoff time unless you increase payments proportionally.

Q4: Should I include fees in the principal?
A: Yes, include all outstanding balances that accrue interest for accurate calculations.

Q5: Can I use this for multiple cards?
A: This calculates single-card payoff. For multiple cards, consider the debt avalanche or snowball method.