1. What is Credit Card Amortization?

Amortization is the process of paying off debt with regular payments over time. For credit cards, each payment is split between interest charges and principal reduction.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• Outstanding Balance — Remaining principal at start of month ($)
• R — Monthly interest rate (APR / 12, as a decimal)
• D — Monthly payment ($)

Explanation: The calculator shows how each payment is divided between interest and principal, and how long it will take to pay off your balance.

3. Importance of Payoff Calculation

Details: Understanding your amortization schedule helps you see the true cost of credit card debt and motivates faster payoff strategies.

4. Using the Calculator

Tips: Enter your current balance, APR, and planned monthly payment. The calculator will show your payoff timeline and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my payment go to interest at first?
A: Early in repayment, your balance is highest so interest charges are largest. More goes to principal as balance decreases.

Q2: How can I pay off my card faster?
A: Increase monthly payments, make biweekly payments, or transfer to a lower APR card.

Q3: What if my payment is less than the interest?
A: Your debt will grow rather than shrink - this is called "negative amortization."

Q4: Does this account for minimum payments?
A: No, this assumes fixed payments. Minimum payments typically extend payoff time dramatically.

Q5: Should I pay off highest APR cards first?
A: Yes, the avalanche method (highest APR first) saves the most money in interest.