1. What is the Credit Card Payoff Formula?

The credit card payoff formula calculates how long it will take to pay off a credit card balance given a fixed monthly payment, accounting for compound interest. This helps borrowers understand the true cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

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

Explanation: The formula accounts for compound interest and shows how increasing your monthly payment can dramatically reduce payoff time.

3. Importance of Debt Payoff Calculation

Details: Understanding payoff time helps consumers make informed decisions about credit card usage, payment strategies, and debt management.

4. Using the Calculator

Tips: Enter your current FNB credit card balance, your planned monthly payment, and the card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to exceed the interest charge?
A: If your payment only covers interest (or less), your balance will never decrease. The payment must be greater than P×R to make progress.

Q2: How can I pay off my credit card faster?
A: Increase monthly payments, make biweekly payments, or transfer to a lower-interest card if possible.

Q3: Does this account for minimum payments?
A: No, this assumes fixed payments. Minimum payments often extend payoff time significantly.

Q4: What if I have multiple cards?
A: Calculate each separately or consider the "debt avalanche" method (pay highest APR first).

Q5: How accurate is this calculator?
A: It provides a good estimate but doesn't account for fees, payment timing, or changing interest rates.