How the Calculator for Credit Card Payoff Operates
You may use this calculator to discover how long and how much it would cost to pay off credit card debt in two distinct scenarios: making minimum payments only or adding additional money each month. It uses a standard monthly compounding interest computation and an iterative reward simulation to get accurate results.
The Formulas in the Tool
Every month, the core computation applies the monthly interest rate (APR divided by 12) to the outstanding debt. The monthly payment is calculated as a percentage of the current debt (the minimum required amount) plus any additional amount you enter.
The algorithm comes next:
- Interest charged is calculated using the formula Balance × (APR/12)
- It adds the additional payment to the balance × minimum percentage to determine the total payment
- If the payment exceeds the remaining balance plus interest, the loan is repaid that month
- Otherwise, the new balance is equal to the old balance plus interest minus the payment
The process is continued until the balance is zero or, at most, 1,200 months (100 years); if the interest is never paid, the tool indicates that the loan will never be paid off.
How the Calculator Works
Enter the minimum payment percentage required by your issuer (usually shown on your statement), your current credit card balance, annual percentage rate (APR), and any additional amount you plan to pay each month. To view, click Calculate.
- Months to payment: The number of months until the balance is zero
- Sum of all interest charges: The entire amount of interest paid over the payback period
- Total payments: The total of your original balance plus all interest
By changing the extra payment box, you can instantly see how even a little additional payment reduces your payback time and lowers overall interest, enabling you to make wise financial decisions.