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Credit Card Payoff Calculator

Find out how long it will take to pay off your credit card balance.

Info of Your Credit Cards

Summary

Add your cards to create a payoff plan

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Create Your Credit Card Debt Payoff Plan

Our Credit Card Payoff Calculator uses the debt avalanche method to create the fastest and most cost-effective plan to eliminate your debt, showing you exactly when you'll be debt-free.

What is a Credit Card Payoff Calculator?

A Credit Card Payoff Calculator is a powerful financial tool that creates a strategic repayment plan to help you get out of debt. By listing all your credit card balances, interest rates (APRs), and minimum payments, and then inputting your total monthly debt budget, the calculator generates a detailed month-by-month schedule. It shows you which card to prioritize and exactly when each card will be paid off, giving you a clear timeline to becoming debt-free and illustrating how much you'll save in interest compared to making only minimum payments.

How It Works: The Debt Avalanche Method

This calculator uses the **Debt Avalanche** method, which is the most mathematically efficient way to pay off debt. The strategy is as follows:

  1. List all debts and order them from the highest interest rate to the lowest.
  2. Make minimum payments on all debts except for the one with the highest APR.
  3. Apply all extra money from your budget towards the highest-APR debt.
  4. Once the highest-APR debt is paid off, take the money you were paying towards it (its minimum payment plus the extra) and apply this entire amount to the debt with the next-highest APR. This creates a "snowball" of payments that grows over time.
  5. Repeat until all debts are paid off.

Interpreting Your Payoff Schedule

The key results are your **Debt-Free Date** and the **Total Interest Paid**. Compare this interest amount to what you would have paid by only making minimums to see your total savings. The amortization schedule is your roadmap—it shows you month by month how your balances decrease and which card you should be targeting with extra payments. This detailed plan removes ambiguity and keeps you motivated on your journey to eliminate debt.

Common Credit Card Myths

  1. Myth 1: Carrying a small balance helps my credit score. False. This is a persistent myth. You do not need to carry a balance and pay interest to build credit. Paying your bill in full every month is the best practice for a healthy credit score.
  2. Myth 2: Closing an old credit card will improve my score. This can actually hurt your score. Closing a card reduces your total available credit (increasing your utilization ratio) and can shorten your average age of credit history. It's often better to keep old, no-fee cards open, even if you don't use them.
  3. Myth 3: The minimum payment is what I'm supposed to pay. The minimum payment is the least you can pay to avoid penalties, but it's designed to keep you in debt for as long as possible, maximizing the interest you pay to the card company.

Frequently Asked Questions

What is the fastest way to pay off credit card debt?

The fastest and cheapest way to pay off credit card debt is the 'Debt Avalanche' method. You make minimum payments on all cards and use any extra money to pay down the card with the highest interest rate first. Our calculator uses this strategy to create your payoff plan.

Is it better to pay off a credit card in full or make payments?

It is always financially better to pay off your credit card balance in full each month. Carrying a balance means you will be charged high compound interest, significantly increasing the total cost of your purchases. Making only minimum payments can keep you in debt for years.

How is credit card interest calculated?

Credit card interest is typically calculated daily. Your card's Annual Percentage Rate (APR) is divided by 365 to get a daily rate. This daily rate is then applied to your outstanding balance each day, which is why balances can grow so quickly.

Does paying off credit cards improve your credit score?

Yes, paying off credit cards is one of the best ways to improve your credit score. It lowers your credit utilization ratio (the amount of credit you're using compared to your total limit), which is a major factor in credit scoring models.

Tips for Getting Out of Debt

  • Create a Budget: Use a budget calculator to track your spending and find extra money you can apply to your debt.
  • Stop Using the Cards: You can't get out of a hole if you keep digging. Stop making new purchases on the cards you're trying to pay off.
  • Try to Lower Your Interest Rates: Call your credit card companies and ask for a lower APR. A good payment history can give you leverage.
  • Consider a Balance Transfer: Look for a balance transfer credit card with a 0% introductory APR. This can give you a window of time to pay down principal without accruing interest.

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