How does the Credit Card Payoff Calculator work?
The annual rate becomes a monthly rate i = zins / 100 / 12. If the payment is at or below the monthly interest (rate ≤ saldo · i), the balance never shrinks and is never paid off. Otherwise: Months = ⌈ −ln(1 − saldo · i / rate) ÷ ln(1 + i) ⌉ and the interest is Interest = rate · Months − saldo.
Background & details
Two numbers do the talking here: the months until debt-free and the total interest. The second is often the shock – it shows how much the debt costs you on top of what you borrowed. At a typical card rate of 15–22 %, you can easily pay back a third of the balance again in interest alone over the full term.
Why the payment decides everything
Every payment is applied to the accrued interest first, and only the rest reduces the balance. If your payment is barely above the monthly interest, almost nothing goes to principal – the debt shrinks painfully slowly. If the payment is below the monthly interest, the balance actually grows despite paying. That is the minimum-payment trap: minimums are often set so low that clearing the debt takes years or decades.
What good values look like
- Interest rate: cards and overdrafts often sit at 14–24 % a year. That is very expensive – almost any other debt (a personal loan, a bank loan) is cheaper.
- Payment: the higher the better. Even doubling the payment often cuts the term to less than half and saves a large chunk of interest.
- Goal: get the balance to zero as fast as possible, then only spend what you can clear in full each month.
Common mistakes
First: paying only the minimum and believing you're making progress. Second: keeping the card in use while paying it down – every new purchase extends the term. Third: leaving expensive card debt in place while cash sits in a savings account. No savings account pays 18 %; clearing the debt is the safest "return" you can get.
Practical tips
Set a fixed, ambitious payment instead of the minimum and treat it like a fixed bill. Check whether you can consolidate onto a cheaper personal loan – dropping the rate from 18 % to, say, 7 % saves a lot, as can a 0 % balance-transfer offer (mind the fee). Use the snowball method: smallest debt first for quick wins, or the avalanche method: highest rate first to pay the least overall. Both work – what matters is sticking with it.
This calculator is ideal for exposing the true cost and testing different payments. It is no substitute for debt counselling once balances across several cards and loans become unmanageable – in that case, get help.