Enter Your Debt Details
Payoff Summary
Payoff Period (Current Payment): -
Total Interest Paid (Current Payment): -
If Monthly Payment is Increased by 25%:
New Payoff Period: -
Total Interest Paid: -
Time Saved: -
Interest Saved: -
Overview
The Credit Card Debt Calculator uses an amortization formula adapted for revolving credit to estimate the time required to pay off your debt with a fixed monthly payment. It then simulates an extra-payment scenario (a 25% increase in your monthly payment) to show how you could save time and interest.
Explanation & Methodology
The payoff period (in months) is calculated using the formula:
$$ n = \frac{-\log\left(1 - \frac{rL}{P}\right)}{\log(1 + r)} $$
where:
L is the outstanding balance,
r is the monthly interest rate (annual rate ÷ 12 ÷ 100),
P is the monthly payment amount.
This formula tells you the number of months required to pay off your debt under the fixed payment schedule.
Example
For example, with a balance of €5,000, an annual interest rate of 18%, and a monthly payment of €150, the calculator estimates the payoff period and total interest. If you increase your payment by 25% (to €187.50), you’ll see a shorter payoff period and reduced interest, highlighting the benefits of extra payments.
Frequently Asked Questions
How is the payoff period calculated?
The calculator uses the formula: n = -log(1 - (r × L)/P) / log(1 + r), where n is the number of monthly payments required to pay off the debt.
What happens if my monthly payment is too low?
If the monthly payment is insufficient to cover the interest (i.e., if P ≤ r × L), the formula cannot be applied, and the tool will alert you that the payment is too low.
How do extra payments help?
Increasing your monthly payment reduces the number of payments needed and decreases the total interest paid over the life of the debt.