1. What is the Credit Card Repayment Formula?

The credit card repayment formula calculates the fixed monthly payment needed to pay off a credit card balance over a specified period, considering the interest rate. It helps borrowers understand their repayment obligations.

2. How Does the Calculator Work?

The calculator uses the credit card repayment formula:

Where:

• \( PMT \) — Monthly payment amount (USD)
• \( Balance \) — Current credit card debt (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Repayment period in months

Explanation: The formula accounts for compound interest and calculates the fixed payment needed to amortize the debt over the specified period.

3. Importance of Payment Calculation

Details: Understanding your required monthly payment helps with budgeting, debt management, and avoiding prolonged debt cycles with high interest costs.

4. Using the Calculator

Tips: Enter your current credit card balance, annual interest rate, and desired repayment period in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include minimum payments?
A: No, this calculates the fixed payment needed to pay off your balance in the specified time. Minimum payments are typically much lower.

Q2: What if I make additional payments?
A: Additional payments will pay off your balance faster and reduce total interest paid. The calculator shows the fixed payment amount only.

Q3: Are fees included in this calculation?
A: No, this calculates interest payments only. Late fees or annual fees would be additional.

Q4: How accurate is this calculation?
A: It's mathematically precise for fixed-rate cards. For variable-rate cards, the payment may change if rates change.

Q5: What's a good repayment period?
A: Shorter periods (12-36 months) save on interest but require higher payments. Choose what fits your budget while minimizing interest.