The Credit Card Equation calculator computes the amount of time required to payoff a credit card, or other fixed rate loan, based on the annual interest rate (APR), total balance (b). and monthly payment (p).
INSTRUCTION: Choose units and enter the following:
- (APR) Annual Percent Rate of interest
- (b) Balance of the credit card debt
- (p) Monthly Payment
Payoff Time (N): vCalc will return the time to pay off the credit card in months. However this can be automatically converted to other time units (e.g. weeks or years) via the pull-down menu.
The Math / Science
The formula for the credit card equation is:
`N = - 1/30 * ln(1 + b/p*(1-(1+"APR"/365)^30))/ln(1+"APR"/365)`
where:
- N = number of months to payoff the credit card
- APR = credit card annual interest rate
- b = balance of the credit card
- p = monthly payment to be made
NOTE: This payoff period assumes a fixed rate of interest AND that no other principle is added to the balance.
The Credit Card Equation calculator calculates the number of months (N) to pay off a credit card with a fixed annual rate (APR) based on a regular payment (p) against a standing debt (b). APR is listed in the credit card contract and may appear on the credit card statement. An article from Value Penguin cites that APRs have an average between 16% and 18% based on the type of card.
This formula is very useful in determining whether additional payments or increased payments should be made in order to pay off a credit card in an acceptable period.
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