Credit Card Payoff Calculator

Understanding the Credit Card Payoff Calculator

Credit card debt can be one of the most challenging financial hurdles due to high interest rates. This calculator is a powerful tool that helps you create a clear plan to become debt-free. It illustrates how your monthly payment amount directly impacts your payoff timeline and the total amount of interest you'll pay.

How It Works

The calculator runs a month-by-month simulation of your credit card balance based on your inputs:

• Card Balance: The total amount of debt you currently owe.
• Interest Rate (APR): The annual percentage rate your card charges.
• Monthly Payment: The amount you plan to pay each month.

The Calculation Logic

Each month, the calculator first calculates the interest accrued on your remaining balance (Balance * (APR / 12)). It then subtracts your monthly payment from the new balance. This process repeats until the balance reaches zero. The tool keeps track of the total months required and the cumulative interest paid.

A crucial feature of this calculator is its ability to show you the impact of making more than the minimum payment. By entering a higher monthly payment, you will see a dramatic reduction in both your payoff time and the total interest paid, demonstrating the most effective way to tackle credit card debt.

Frequently Asked Questions