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 monthly payments. It accounts for the principal balance, minimum payment amount, and annual interest rate (APR).

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula calculates how many months it will take to pay off the debt when making fixed minimum payments that include both principal and 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 long-term cost of minimum payments.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (or percentage of balance), and your annual percentage rate (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) and mostly go toward interest in the early years, not principal.

Q2: What if my minimum payment changes?
A: This calculator assumes fixed minimum payments. If your payment is percentage-based, the time may be longer as payments decrease with balance.

Q3: How can I pay off my debt faster?
A: Paying more than the minimum, even slightly, can dramatically reduce payoff time and total interest paid.

Q4: What happens if I only pay the minimum?
A: You may pay 2-3 times the original balance in interest, and payoff could take decades for large balances.

Q5: Are there limitations to this calculation?
A: Yes, it assumes no additional charges, fixed interest rate, and consistent minimum payment amount (not percentage-based).