1. What is the Minimum Payment Calculation?

This calculator estimates how long it will take to pay off credit card debt making only the minimum payments each month. It shows the impact of interest compounding on credit card debt.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

• \( P \) — Principal balance ($)
• \( MP \) — Minimum payment ($)
• \( R \) — Monthly interest rate (APR/12 as decimal)
• \( T \) — Time to payoff (months)

Explanation: The formula calculates how many months it would take to pay off the debt making only minimum payments, accounting for compound interest.

3. Importance of Understanding Minimum Payments

Details: Making only minimum payments can result in paying significantly more interest over time. This calculator helps visualize the true cost of carrying credit card debt.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (or percentage of balance), and your APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does it take so long to pay off with minimum payments?
A: Minimum payments are typically small (often 1-3% of balance) so most of your payment goes toward interest rather than principal.

Q2: How can I pay off my debt faster?
A: Pay more than the minimum, even small additional amounts can significantly reduce payoff time and total interest paid.

Q3: What if my minimum payment changes?
A: This calculator assumes a fixed minimum payment. In reality, minimum payments decrease as your balance decreases.

Q4: What's a good APR for a credit card?
A: Rates vary, but generally under 15% is good. Many cards offer 0% introductory APRs for limited periods.

Q5: Does this account for late fees or other charges?
A: No, this calculates only the basic interest charges. Additional fees would increase payoff time.