Total Interest: $'+totalInt.toFixed(2)+'
Total Amount Paid: $'+totalPaid.toFixed(2)+'';if(showSteps){stepsArea.innerHTML='Calculation using logarithmic debt formula:
n = -ln(1 – (0.01575 * 5000) / 200) / ln(1.01575)
Where r = APR/12. This accounts for interest compounding monthly.';stepsArea.style.display='block';}else{stepsArea.style.display='none';}}else{var n=parseFloat(document.getElementById('months').value);if(isNaN(n)||n<=0){alert('Please enter a valid number of months.');return;}var pmt=(r*bal)/(1-Math.pow(1+r,-n));var totalPaid=n*pmt;var totalInt=totalPaid-bal;resultArea.innerHTML='To pay off your balance in '+n+' months, your monthly payment should be:
$'+pmt.toFixed(2)+'
Total Interest Paid: $'+totalInt.toFixed(2)+'
Total Cost: $'+totalPaid.toFixed(2)+'';if(showSteps){stepsArea.innerHTML='Amortization Formula Used:
P = (r * PV) / (1 – (1 + r)^-n)
Monthly payment required to zero out the balance over '+n+' months.';stepsArea.style.display='block';}else{stepsArea.style.display='none';}}}
Using the Credit Card Calculator
Managing revolving debt requires a clear understanding of how interest rates and payment amounts interact. This credit card calculator is designed to help you visualize your path to becoming debt-free. By adjusting your monthly payment or setting a specific payoff goal, you can see exactly how much interest you will save over time.
Whether you are dealing with a single high-interest card or planning a debt consolidation strategy, knowing the "time to payoff" is the first step in financial recovery. This tool provides two distinct calculation modes:
- Time to Pay Off Balance
- Enter your current balance and what you can afford to pay each month. The calculator will tell you how many months it will take to reach a zero balance and how much total interest the bank will collect.
- Monthly Payment for Goal Date
- If you want to be debt-free by a certain date (e.g., 24 months), use this option. It calculates the fixed monthly payment required to hit that target, assuming no further charges are made to the card.
How Credit Card Interest is Calculated
Credit cards use a daily or monthly compounding interest method. While your APR (Annual Percentage Rate) is expressed as a yearly figure, the bank actually applies interest much more frequently. The credit card calculator uses the standard monthly compounding formula:
n = -ln(1 – (r * B) / P) / ln(1 + r)
- n = Number of months to payoff
- B = Current balance ($)
- P = Monthly payment amount ($)
- r = Monthly interest rate (APR / 12 / 100)
- ln = Natural logarithm
It is vital to note that if your Monthly Payment (P) is equal to or less than the interest accrued in a month (r * B), the debt will never decrease. This is often referred to as a "negative amortization" trap, where you make payments but your balance stays the same or grows.
Calculation Example
Example: Let's say you have a credit card balance of $5,000 with an APR of 18%. You decide to pay $200 every month. How long will it take to pay it off?
Step-by-step solution:
- Identify Variables: Balance (B) = $5,000, APR = 18%, Payment (P) = $200.
- Calculate Monthly Rate: r = 18 / 100 / 12 = 0.015.
- Check Sustainability: Interest this month = $5,000 * 0.015 = $75. Since $200 > $75, the balance will decrease.
- Apply Formula: n = -ln(1 – (0.015 * 5000) / 200) / ln(1.015).
- Calculate: n = -ln(1 – 0.375) / ln(1.015) = -ln(0.625) / 0.01488.
- Result: n ≈ 32 months. Total interest paid would be approximately $1,316.
Common Questions
Does the calculator account for new purchases?
No. This credit card calculator assumes that you stop using the card for new purchases while paying down the existing balance. If you continue to use the card, the balance will fluctuate, and the payoff time will increase significantly.
What is the "Minimum Payment" trap?
Credit card issuers typically set minimum payments at 1% to 3% of the total balance. Paying only the minimum barely covers the interest, meaning most of your money goes to the bank rather than reducing your debt. Using this calculator, you can see how even adding $50 or $100 above the minimum can shave years off your payoff timeline.
How does a balance transfer affect these results?
If you use a 0% APR balance transfer offer, you would enter "0" in the interest rate field for the duration of the promotional period. This allows you to see how quickly you can pay off the principal when interest is not compounding against you. Always factor in the transfer fee (usually 3-5%) into your starting balance.