Credit Card Payoff Formula:
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This calculator estimates how long it will take to pay off credit card debt making only the minimum payments. It shows the impact of interest compounding when only minimum payments are made.
The calculator uses the credit card payoff formula:
Where:
Explanation: The formula calculates how many months it would take to pay off the debt when making fixed minimum payments that cover at least the interest charges.
Details: Making only minimum payments can result in paying significantly more interest and taking much longer to pay off debt. This calculator helps visualize that impact.
Tips: Enter your current credit card balance, the minimum payment amount (or percentage of balance), and your card's APR. All values must be positive numbers.
Q1: Why does it take so long to pay off with minimum payments?
A: Minimum payments are often structured to cover mostly interest with little principal reduction, causing the debt to persist.
Q2: What if my minimum payment is a percentage of the balance?
A: Convert the percentage to a dollar amount based on your current balance for this calculation.
Q3: How can I pay off my credit card faster?
A: Pay more than the minimum, even small additional amounts can significantly reduce payoff time and interest paid.
Q4: Does this account for changing interest rates?
A: No, this assumes a fixed APR. If your rate changes, recalculate with the new rate.
Q5: What if I can't make the minimum payment?
A: Contact your credit card company immediately to discuss options as missed payments hurt your credit score.