1. What is Credit Card Amortization?

Amortization is the process of spreading out debt payments over time through regular installments. For credit cards, each payment is divided between interest charges and principal reduction.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• Outstanding Balance — Remaining principal at start of month ($)
• R — Monthly interest rate (APR / 12, as decimal)
• D — Monthly payment ($)

Explanation: Each payment first covers the interest due, with the remainder applied to reduce the principal.

3. Importance of Amortization Schedule

Details: Understanding your amortization schedule helps you see how much of each payment goes toward interest vs. principal, and how increasing payments can reduce total interest paid.

4. Using the Calculator

Tips: Enter your current credit card balance, APR, and planned monthly payment. The calculator will show how long it will take to pay off and how much interest you'll pay.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: When your balance is highest, the interest charge is largest, leaving less of your payment to reduce principal.

Q2: How can I pay off my credit card faster?
A: Increasing your monthly payment, even slightly, can significantly reduce payoff time and total interest.

Q3: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any fees, giving a complete picture of borrowing cost.

Q4: Should I pay more than the minimum?
A: Absolutely. Minimum payments often barely cover interest, leading to very long payoff periods.

Q5: Does this calculator account for new charges?
A: No, it assumes you won't add new charges and will make consistent monthly payments.