MoneySuperMarket Credit Card Calculator Payoff Schedule

Credit Card Payoff Formula:

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

Time to Payoff (T):

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1. What is the Credit Card Payoff Calculator?

This calculator estimates the time required to pay off credit card debt based on your current balance, monthly payment amount, and annual percentage rate (APR). The calculation follows the MoneySuperMarket payoff schedule formula.

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:

\( P \) — 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 your credit card debt based on your current payment schedule and interest rate.

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 in GBP, your fixed monthly payment amount in GBP, and your card's APR percentage. All values must be valid (balance > 0, payment > 0, APR ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: What if my payment is too low to pay off the debt?
A: If your monthly payment doesn't cover the interest (D ≤ P × R), the calculator will show the debt cannot be paid off with that payment amount.

Q2: Does this account for minimum payments?
A: No, this assumes a fixed payment amount. Minimum payments typically decrease as balance decreases, which would require a different calculation.

Q3: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rate. Actual results may vary slightly due to rounding in real credit card statements.

Q4: What's the best way to pay off credit card debt faster?
A: Increase monthly payments, reduce spending, or consider a balance transfer to a lower-interest card if possible.

Q5: Does this work for other types of loans?
A: This formula is specific to credit cards with compounding interest. Mortgages and installment loans use different calculations.