1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off your credit card debt based on your current balance, monthly payment, and interest rate. It uses the formula recommended by Martin Lewis to help you understand your debt repayment timeline.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

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

Explanation: The formula calculates how many months it will take to pay off the debt based on your regular monthly payment and the compounding interest.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps you make informed decisions about debt repayment strategies, whether to prioritize higher payments, or consider balance transfer options.

4. Using the Calculator

Tips: Enter your current credit card balance, the fixed amount you can pay each month, and your card's 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 payment need to be above a certain amount?
A: If your payment doesn't cover the monthly interest (P × R), your debt will grow rather than shrink, making payoff impossible.

Q2: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual results may vary if these change.

Q3: What if I make additional payments?
A: Extra payments will reduce your payoff time. Recalculate with your new regular payment amount.

Q4: Does this work for multiple credit cards?
A: No, this calculates payoff for one card at a time. For multiple cards, calculate each separately or consider debt consolidation.

Q5: What's the best strategy to pay off credit cards faster?
A: Martin Lewis recommends either the "avalanche" method (highest interest first) or "snowball" method (smallest balance first).