1. What is Bankrate's Payoff Formula?

The Bankrate formula calculates how long it will take to pay off a credit card debt based on your current balance, monthly payment, and annual percentage rate (APR). It provides a more accurate estimate than simple division by accounting for compound interest.

2. How Does the Calculator Work?

The calculator uses Bankrate's formula:

Where:

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

Explanation: The formula accounts for the compounding effect of interest on your credit card balance, showing how increasing your payment can dramatically reduce payoff time.

3. Importance of Payoff Calculation

Details: Knowing your payoff timeline helps with financial planning, debt management strategies, and understanding the true cost of carrying credit card debt.

4. Using the Calculator

Tips: Enter your current HDFC credit card balance, your planned monthly payment, and the card's APR. For accuracy, use statements to get exact numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to exceed the interest charge?
A: If your payment only covers interest, your principal never decreases. The calculator requires payment > (balance × monthly rate) to show payoff.

Q2: How can I pay off my card faster?
A: Increase monthly payments, make biweekly payments, or transfer to a lower-rate card. Even small payment increases significantly reduce payoff time.

Q3: Does this account for minimum payments?
A: No, it assumes fixed payments. Minimum payments often extend payoff time dramatically due to mostly covering interest.

Q4: What if my APR changes?
A: Recalculate with the new rate. Variable APRs make payoff estimates less certain over long periods.

Q5: Are there HDFC-specific considerations?
A: HDFC may have particular fees or grace periods. Check your cardholder agreement for details that might affect payoff.