1. What is the Credit Card Payoff Formula?

The credit card payoff formula calculates how long it will take to pay off credit card debt when making fixed monthly payments, taking into account the interest rate. It helps borrowers understand the true cost of carrying credit card debt.

2. How Does the Calculator Work?

The calculator uses the credit card payoff formula:

Where:

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

Explanation: The formula accounts for compound interest and shows how increasing payments can dramatically reduce payoff time.

3. Importance of Calculating Payoff Time

Details: Understanding payoff time helps consumers make informed decisions about debt repayment strategies and avoid paying excessive interest.

4. Using the Calculator

Tips: Enter your current credit card balance, the fixed monthly payment you can afford, and the annual interest rate. The calculator will show how long it will take to become debt-free.

5. Frequently Asked Questions (FAQ)

Q1: Why does my debt never seem to go down?
A: If your monthly payment is close to the interest charge, most of your payment goes toward interest rather than principal.

Q2: How can I pay off my debt faster?
A: Even small increases in monthly payments can significantly reduce payoff time and total interest paid.

Q3: What if the calculator says "Payment too low"?
A: This means your payment doesn't cover the monthly interest, so your debt will grow rather than shrink.

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

Q5: How accurate is this calculator?
A: It provides a good estimate assuming fixed payments and interest rates. Actual results may vary slightly.