Credit Card Payoff Formula:
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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.
The calculator uses the following equation:
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.
Details: Understanding your payoff timeline helps with financial planning, debt management, and evaluating whether you should increase payments or consider balance transfers.
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.
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.