1. What is the Credit Card Repayment Formula?

The credit card repayment formula calculates how long it will take to pay off your credit card debt based on your current balance, monthly payment, and interest rate. It accounts for compound interest and shows the true cost of credit card debt.

2. How Does the Calculator Work?

The calculator uses the credit card repayment formula:

Where:

• \( P \) — Principal balance (GBP)
• \( D \) — Monthly payment (GBP)
• \( R \) — Monthly interest rate (APR / 12 as decimal)
• \( T \) — Time to pay off (months)

Explanation: The formula calculates how many months it will take to pay off the debt by considering how each payment reduces the principal while accounting for accumulating interest.

3. Importance of Repayment Calculation

Details: Understanding your repayment timeline helps with financial planning, shows the impact of higher payments, and reveals how interest charges extend your debt period.

4. Using the Calculator

Tips: Enter your current credit card balance in GBP, your fixed monthly payment amount in GBP, and your card's APR interest rate. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my debt never get paid off?
A: If your monthly payment is less than the monthly interest charges, your balance will grow rather than shrink. You need to pay more than the interest to reduce debt.

Q2: How can I pay off my card faster?
A: Increase your monthly payment, transfer to a lower APR card, or make bi-weekly instead of monthly payments.

Q3: Does this include fees or charges?
A: No, this calculates interest only. Late fees or other charges would extend the repayment period further.

Q4: What's a good monthly payment?
A: At minimum, pay more than the interest charges. Ideally, pay as much as you can afford to minimize interest costs.

Q5: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual results may vary slightly with billing cycles.