1. What is the Credit Card Payoff Calculator?

This calculator compares how long it will take to pay off multiple credit card debts in Canada using NerdWallet's methodology. It helps you understand which debts will take longest to pay off based on your current payments.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

• \( P \) — Principal balance per card (CAD)
• \( D \) — Monthly payment (CAD)
• \( R \) — 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 each credit card based on your current payment amount and interest rate.

3. Importance of Comparing Payoff Times

Details: Understanding payoff times helps prioritize which debts to tackle first. Generally, you should focus on either the highest interest debt (avalanche method) or the smallest balance (snowball method).

4. Using the Calculator

Tips: Enter the balance, monthly payment, and APR for each credit card. The calculator will show you how long each will take to pay off at your current payment rate.

5. Frequently Asked Questions (FAQ)

Q1: Why does my payment need to be more than the interest?
A: The formula requires that your payment covers at least the monthly interest (D × R < P), otherwise the debt would grow instead of shrink.

Q2: Should I include minimum payments?
A: You can, but the calculator works best with payments above the minimum to show realistic payoff times.

Q3: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual payoff may vary if rates change or payments fluctuate.

Q4: What's the best strategy for multiple cards?
A: Mathematically, paying highest APR first saves most money. Psychologically, paying smallest balance first may provide motivation.

Q5: Does this work for lines of credit?
A: Yes, it works for any revolving debt with a fixed interest rate and payment.