1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off credit card debt when making fixed monthly payments, using the formula recommended by the Money Advice Service.

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 (APR / 12, as a decimal)
• \( T \) — Time to payoff (months)

Explanation: The formula calculates how many months it will take to pay off the debt given a fixed monthly payment and interest rate.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning and debt management. It shows the impact of different payment amounts on your debt-free date.

4. Using the Calculator

Tips: Enter your current credit card balance, your planned monthly payment, and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my debt never get paid off?
A: If your monthly payment is less than the interest charged each month, your debt will never be paid off. You need to increase your payment.

Q2: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual results may vary slightly due to rounding or if your terms change.

Q3: What's the best way to pay off credit cards faster?
A: Pay more than the minimum payment, consider balance transfers to lower rates, or use the debt avalanche/snowball methods.

Q4: Does this work for other types of loans?
A: This formula works best for credit cards. Mortgages and installment loans use different amortization formulas.

Q5: Should I include fees in the principal?
A: Yes, include any fees that are added to your balance. Regular monthly fees should be added to your payment amount.