1. What is the Credit Card Payoff Calculator?

This calculator determines how many months it will take to pay off a credit card balance given a fixed monthly payment and interest rate. It helps users understand the impact of different payment amounts on their debt repayment timeline.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( PMT \) — Monthly payment amount (USD)
• \( \text{Balance} \) — Current credit card balance (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)

Explanation: The formula calculates the time required to pay off a balance with fixed payments, accounting for compound interest.

3. Importance of Payoff Calculation

Details: Understanding payoff timelines helps consumers make informed decisions about debt repayment strategies and evaluate the impact of increasing monthly payments.

4. Using the Calculator

Tips: Enter your current balance, planned monthly payment, and annual interest rate. The payment must exceed the monthly interest charge for the balance to decrease.

5. Frequently Asked Questions (FAQ)

Q1: Why does my balance never decrease?
A: If your monthly payment is less than the monthly interest charge, your balance will continue to grow despite making payments.

Q2: How can I pay off my debt faster?
A: Increase your monthly payment amount, even by small increments, to significantly reduce payoff time and total interest paid.

Q3: Does this account for minimum payments?
A: No, this assumes fixed payments. Minimum payments typically extend payoff time dramatically.

Q4: What's the snowball vs avalanche method?
A: Snowball pays smallest debts first for psychological wins; avalanche pays highest-interest debts first to save money.

Q5: Should I consider balance transfers?
A: A 0% balance transfer can help if you can pay off during the promo period, but watch for transfer fees.