Credit Card Payoff Calculators enable you to figure out how long you'll take to pay off your credit card bills under a fixed monthly payment plan. It is basically a type of credit card debt calculator that helps you get a credit card amortization schedule, with the interest and principal amount, payable on a monthly basis. In addition, this calculator (also known as Credit Card Payment Calculator) determines the total interest you need to pay on the balance.
This calculator requires you to enter the principal balance, interest rate (or APR) and fixed monthly payment in order to get the amortization schedule.
Credit Card Payoff Calculator
|Credit Card||Current Balance ($)||Interest (% p.a.)||Monthly Payment ($)|
Disclaimer: The Credit Card Payment Calculator is made available to you as a self-help tool. As such, the accuracy of the figures and the applicability of the calculator in regards to your individual situation cannot be guaranteed. Also, the Credit Card Payment Calculator does not include credit balance insurance and other fees which may be optional.
Credit Card Payoff Calculator - How it works
This Credit Card Payoff Calculator assumes that you're not using your card while paying off the balance. It also doesn’t include grace period in its calculation..
Credit Card Amortization
The Credit Card Amortization Calculators take into account the basics of amortization. Take a look at the example given below.
Emma used her credit card for a purchase worth $1000. The card details are:
- APR (Annual Percentage Rate) or Interest rate = 24%
- Fixed monthly payment = $100
Now, the card interest rates are mostly compounded on a monthly basis. So, the monthly interest rate here is = 24/12% = 2% (0.02)
The monthly interest (or finance charge) is added to the credit card bill each month.
Interest in the 1st month = $1000 x .02 = $20
Bill In the 1st month = Principal + Interest = $1000 + $20 = $1020
Principal payment in the 1st month = Fixed monthly payment - Interest = $100 - $20 = $80
The new balance (what Emma owes after the 1st month) = $1020 - $100 = $920
Interest in the 2nd month = New balance x .02 = $920 x .02 = $18.40
Bill in the 2nd month = New balance + Interest = $920 + $18.40 = $938.40
Principal payment for 2nd month = $100 - $18.40 = $81.60
New balance after 2nd payment = $938.40 - $100 = $838.40
The calculation of the interest, principal payment and balance goes on till the outstanding balance is less than $100. At that time, Emma will just need to pay what she owes. This is how a Credit Card Payment Calculator works out a payment/amortization schedule.
Credit Card Payoff Calculator variables
The variables associated with a Credit Card Payoff Calculator are:
- Card balance: It is the total outstanding debt (including principal and interest) that you'd like to pay off.
- Interest rate or APR: This is the annual interest rate charged on the outstanding balance you keep on the card each month.
- Monthly payment: This is the fixed amount you pay each month towards reducing your outstanding balance. It includes payment towards the principal amount and the accrued interest.
- Minimum payment: This is the minimum amount you're required to pay every month. You can use a Credit Card Minimum Payment Calculator to compute the minimum amount you have to pay towards a credit account every month. Just like the Credit Card Debt Consolidation Calculator, you'll have to enter the current credit card balance, interest rate and fixed monthly payment in this calculator. You can get free Credit Card Minimum Payment Calculator from various websites.
- Credit card amortization schedule: This is the credit card payment schedule for the entire payoff period. Amortization means reduction of debt by making equal monthly payments over a certain time period. The amortization schedule shows how much dollars you make as interest payment and the amount you pay towards reducing the principal amount, each month, till your card balance is zero.