1. What is the Credit Card Repayment Formula?

The credit card repayment formula estimates the time required to pay off a credit card balance when making fixed monthly payments. It accounts for the principal balance, monthly payment amount, and the card's interest rate.

2. How Does the Calculator Work?

The calculator uses the repayment formula:

Where:

• \( P \) — Principal balance (AUD)
• \( D \) — Monthly payment (AUD)
• \( R \) — Monthly interest rate (annual rate / 12, as decimal)
• \( T \) — Time to repay (months)

Explanation: The formula calculates how many months it will take to pay off the debt given your current balance, payment amount, and interest rate.

3. Importance of Repayment Calculation

Details: Understanding your repayment timeline helps with financial planning and shows the impact of making larger payments or reducing interest rates.

4. Using the Calculator

Tips: Enter your current balance in AUD, your monthly payment amount in AUD, and your annual interest rate as a percentage. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if my payment is less than the interest?
A: If your monthly payment is less than the monthly interest (P × R), the calculator will show "Infinite" as you'll never pay off the debt.

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

Q3: How accurate is this calculator?
A: It provides a good estimate but doesn't account for changing rates, fees, or payment variations.

Q4: Can I use this for other loans?
A: This formula works best for credit cards. Mortgage and personal loan calculations differ.

Q5: How can I pay off my card faster?
A: Increase monthly payments, reduce spending on the card, or transfer to a lower-rate card.