1. What is the Credit Card Payoff Calculator?

This calculator estimates how long it will take to pay off your credit card debt in the UK based on your current balance, monthly payment, and annual interest rate (APR).

2. How Does the Calculator Work?

The calculator uses the credit card payoff equation:

Where:

• \( P \) — Principal balance (GBP)
• \( D \) — Monthly payment (GBP)
• \( R \) — Monthly interest rate (APR/12 as decimal)
• \( T \) — Time to payoff (months)

Explanation: The equation calculates how many months it will take to pay off the debt considering compound interest. If your payment is less than the monthly interest, the debt will never be paid off.

3. Importance of Payoff Calculation

Details: Understanding your payoff timeline helps with financial planning and shows the true cost of making only minimum payments. It can motivate you to increase payments to save on interest.

4. Using the Calculator

Tips: Enter your current credit card balance in GBP, your fixed monthly payment amount in GBP, and your annual percentage rate (APR). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does my debt never get paid off?
A: If your monthly payment is less than the monthly interest (P × R), your balance will grow rather than shrink.

Q2: How accurate is this calculator?
A: It assumes fixed payments and interest rates. Real-world factors like payment changes or rate adjustments aren't accounted for.

Q3: What's a good monthly payment amount?
A: Pay as much above the minimum as possible. Even small increases can significantly reduce payoff time.

Q4: Does this work for other loans?
A: This specific formula works best for credit cards. Mortgages and installment loans use different amortization methods.

Q5: How can I pay off debt faster?
A: Consider balance transfers to 0% cards, debt consolidation loans, or increasing your monthly payment amount.