The Credit Card Payoff Calculator is a financial modeling tool used to estimate the time required to amortize revolving credit debt given a specific fixed monthly payment. Unlike minimum payments, which fluctuate as the principal decreases, a fixed payment strategy accelerates principal reduction and minimizes compound interest accrual.

This utility allows borrowers to simulate different payment scenarios to find a “Debt-Free Date” and quantifies the interest savings compared to a standard long-term repayment schedule.

1 Calculator

2 Formula

The calculator solves for the number of periods (n) using the amortization formula rearrangement for a fixed payment (PMT), present value (PV), and periodic interest rate (i):

Where:

• PV = Outstanding Credit Card Balance
• PMT = Fixed Monthly Payment Amount
• i = Monthly Interest Rate (APR / 12)

3 Debt Strategy

Paying a fixed amount is significantly more effective than paying the minimum percentage. For borrowers with multiple cards, this tool can be used in conjunction with a Debt Payoff Calculator (Multiple Debts) to execute a “Debt Avalanche” or “Debt Snowball” strategy.

The Avalanche Method suggests prioritizing the card with the highest APR (as entered above), while the Snowball Method prioritizes the lowest balance. Both require paying more than the minimum to be effective.

4 Minimum vs Fixed

Most credit card issuers calculate the Minimum Payment as a percentage (e.g., 2% to 4%) of the current balance. As the balance drops, the minimum payment drops, which extends the loan term almost indefinitely.

By fixing the payment amount (e.g., locking it at ₹5,000 even when the balance drops to ₹50,000), the percentage of the payment applied to principal increases every month, creating an accelerating payoff curve.