Home Back

Money Advice Service Credit Card Calculator Payoff Schedule

Credit Card Payoff Formula:

\[ T = \frac{\log\left(\frac{P}{P - D \times R}\right)}{\log(1 + R)} \]

GBP
GBP
%

Unit Converter ▲

Unit Converter ▼

From: To:

1. What is the Credit Card Payoff Formula?

The Money Advice Service credit card payoff formula calculates how long it will take to pay off credit card debt based on your current balance, monthly payment, and interest rate. This helps you understand your debt repayment timeline.

2. How Does the Calculator Work?

The calculator uses the following equation:

\[ T = \frac{\log\left(\frac{P}{P - D \times R}\right)}{\log(1 + R)} \]

Where:

Explanation: The formula accounts for compound interest and calculates how many months it will take to reduce the balance to zero with regular payments.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning, debt management, and evaluating whether you should increase payments or consider balance transfers.

4. Using the Calculator

Tips: Enter your current credit card balance, the fixed monthly payment you can afford, and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if my payment is too low to pay off the debt?
A: The calculator will show an error if your payment doesn't cover the monthly interest (payment ≤ principal × monthly rate).

Q2: Does this account for minimum payments?
A: No, this assumes fixed payments. Minimum payments typically extend payoff time significantly.

Q3: How accurate is this calculation?
A: It's mathematically precise for fixed payments and interest rates, but actual results may vary with changing rates or payments.

Q4: Should I include fees in the principal?
A: For most accurate results, use your current statement balance including any accrued interest.

Q5: How can I pay off debt faster?
A: Increase monthly payments, reduce spending, or consider a 0% balance transfer card if eligible.

Money Advice Service Credit Card Calculator Payoff Schedule© - All Rights Reserved 2025