1. What is the Credit Card Debt Payoff Formula?

The credit card debt payoff formula calculates how long it will take to pay off a credit card balance making fixed monthly payments, considering the interest rate. It helps borrowers understand the real cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses the debt payoff formula:

Where:

• \( P \) — Principal balance (Rs)
• \( D \) — Monthly payment (Rs)
• \( R \) — Monthly interest rate (annual rate / 12)
• \( T \) — Time to pay off debt (months)

Explanation: The formula accounts for compound interest and calculates how many periods (months) are needed to reduce the balance to zero with regular payments.

3. Importance of Debt Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, shows the true cost of minimum payments, and motivates debt reduction strategies.

4. Using the Calculator

Tips: Enter your current balance, monthly payment amount, and annual interest rate. The calculator will show how long it will take to become debt-free.

5. Frequently Asked Questions (FAQ)

Q1: Why does my debt seem to never go down?
A: If your monthly payment is less than the interest charged, your balance will grow despite making payments.

Q2: How can I pay off debt faster?
A: Increase monthly payments, reduce spending to free up more money for payments, or consider balance transfers to lower-rate cards.

Q3: What's a good monthly payment amount?
A: Ideally, pay more than the minimum - at least 2-3% of your balance. The more you pay monthly, the faster you'll be debt-free.

Q4: Does this work for other loans too?
A: This formula works for any fixed-rate debt with fixed payments, including personal loans. Mortgages use a different calculation.

Q5: What if I make extra payments?
A: Extra payments will reduce your payoff time. Recalculate with your new higher payment amount to see the impact.