How to Calculate the Time to Pay Off a Credit Card

One of the most frustrating aspects about credit card debt is how long it can take to pay it off. Each month you make a minimum payment, but it seems to barely reduce the total balance. It's easy to wonder if you'll ever pay off the debt. There is a way to determine how long it will take to pay off credit card debt and how to calculate your payoff date.

Instructions

Time to Debt Payoff: The Fast Way

1

Don't use your credit card. Your calculations won't be accurate if you continue to use the credit card. Also be sure to make your payments on time to avoid late fees and penalties such as increased interest rates.

2

Write down your balance, interest and minimum payment from your statement.

3

Visit CNNMoney.com to use its "When Will You Be Debt Free" calculator (http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp). The calculator can be used to find out when your debt will be paid if you stick to the minimum payment, or you can ask it to calculate your payoff date based on a monthly payment of your choice. You can even use it to select a date for payoff and it will tell you how much you need to pay each month to reach that goal.

Time to Debt Payoff: The Math

4

Do the math yourself. You can estimate your time to pay off a credit card using your calculator and some basic math. First you need to divide the interest rate of the credit card by 100. For example, if your interest rate is 20 percent, divide 20 by 100 to get 0.20.

5

Multiply your interest rate percentage from Step 1 with your remaining balance. This answer is the amount of interest you pay each year if the balance remains the same. For example, if you have credit card debt of $3,000 at 20 percent interest, you'd multiply 3000 x 0.20 to get 600.

6

Add the result from Step 2 to your balance due. Using the previous example, you'd add $600 to the $3,000 balance to get $3,600.

7

Divide the answer in Step 3 by your minimum payments. The result is the amount of time in months it will take to pay off your credit cards by paying just the minimum payment each month. $3,600 divided by $120 comes out to be 30 months. If you're able to pay more, divide the answer in Step 3 by the amount you're able to pay (e.g., $3,600 divided by $200 would equal 18 months).

8

If you'd like to calculate the amount you need to pay to pay off the debt within a specific time frame, divide the answer in Step 3 by the number of months. If you want to pay off the debt in two years, divide the answer from Step 3 by 24 (2 years equals 24 months). Using the previous example, $3,600 divided by 24 would equal a $150 monthly payment.