Credit Card Payoff Calculator

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How to Use the Credit Card Payoff Calculator

This tool will show you the true cost of your credit card debt and how long it will take to become debt-free. For an accurate calculation, please provide:

• Credit Card Balance ($): The total amount of money you currently owe on the credit card.
• Annual Percentage Rate (APR) (%): This is the yearly interest rate charged on your balance. You can find this on your monthly statement.
• Monthly Payment ($): The amount you plan to pay each month. To make progress, this should be higher than your minimum required payment.

Understanding Credit Card Debt: The Compounding Problem

Credit card debt is challenging because of compound interest. Unlike a simple interest loan, the interest on a credit card is calculated on your balance plus any previously accrued interest. This is why balances can feel like they're barely shrinking when you only make minimum payments—most of your payment is being eaten by interest charges.

Popular Debt Payoff Strategies

Two well-known methods can help you tackle your debt systematically:

• The Avalanche Method: You focus on paying off the card with the highest APR first, while making minimum payments on all others. This method saves you the most money in total interest paid.
• The Snowball Method: You focus on paying off the card with the smallest balance first, regardless of the interest rate. This method provides quick psychological wins, which can help you stay motivated on your debt-free journey.

What To Do With Your Results

The numbers from this calculator are your call to action. Here’s how to use them:

See the Impact of Extra Payments

Use the "Monthly Payment" field to see how increasing your payment—even by just $25 or $50—can dramatically shorten your payoff time and save you hundreds or even thousands in interest. This is the most powerful feature of the calculator.

Create a Debt Payoff Plan

Once you've chosen a monthly payment you can stick to, make it automatic. Set up an automatic transfer from your bank account so you never miss a payment and are consistently chipping away at the principal.

Consider Your Options

If your interest rate is very high, you might consider options like a balance transfer credit card with a 0% introductory APR or a personal loan with a lower interest rate to consolidate your debt. Be sure to read the terms carefully before making a decision.