1. What is the Credit Card Payment Formula?

The credit card payment formula calculates the fixed monthly payment needed to pay off a credit card balance in a specific timeframe, including interest. This is based on Martin Lewis's advice for managing credit card debt.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( D \) — Monthly payment (GBP)
• \( P \) — Principal balance (GBP)
• \( R \) — Monthly interest rate (annual rate ÷ 12, as decimal)
• \( N \) — Payoff time (months)

Explanation: The formula calculates the fixed payment needed to pay off the balance in N months, accounting for compound interest.

3. Importance of Calculating Monthly Payments

Details: Knowing your required monthly payment helps you plan debt repayment, avoid prolonged debt, and minimize interest costs.

4. Using the Calculator

Tips: Enter your current balance, annual interest rate, and desired payoff period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use this formula instead of minimum payments?
A: Minimum payments often extend debt for years with high interest. This calculates payments to clear debt in your chosen timeframe.

Q2: What's a good payoff timeframe?
A: Ideally under 3 years (36 months). Shorter timeframes save interest but require higher payments.

Q3: Does this account for changing interest rates?
A: No, it assumes a fixed rate. If your rate changes, recalculate with the new rate.

Q4: What if I can't afford the calculated payment?
A: Consider a balance transfer to a 0% card or extend your payoff period (but this increases total interest).

Q5: How accurate is this calculator?
A: It's mathematically precise for fixed-rate cards. Variable rates or fees may affect actual payments.