How This Calculation Works
This calculator solves the amortization formula in reverse: instead of finding a payment from a fixed term, it finds how many months it will take to eliminate a balance given a fixed monthly payment. Each month, interest is added to the balance first, then your payment is applied — so a portion of every payment covers that month's interest, and the rest reduces the principal.
If your payment is less than or equal to the interest charged each month, the balance will never shrink — it can even grow indefinitely, since the interest keeps outpacing your payment. The calculator flags this situation and shows you the minimum payment needed just to stop the balance from growing (interest-only), so you know how much more you need to pay to actually make progress.
The total interest figure shows exactly how much extra you'll pay beyond the original balance — often a powerful motivator for paying more than the minimum, since even modest increases in monthly payment can cut both the payoff time and total interest substantially.
Common Mistakes to Avoid
- Paying only the minimum on high-interest debt. Credit card minimums are often calculated to keep you in debt as long as possible. Paying even $20–50 extra per month can cut years off the payoff time on a high-interest balance.
- Not tackling the highest-rate debt first. If you have multiple debts, mathematically the fastest way to become debt-free is the "avalanche" method — pay minimums on everything, then throw extra money at the highest-interest debt first.
- Ignoring balance transfer or refinancing options. Moving high-interest debt to a lower-rate card or loan can dramatically reduce total interest paid — just watch for balance transfer fees and promotional period expirations.
- Adding new charges while paying down a balance. This calculator assumes no new spending on the balance. Continuing to charge the card while trying to pay it off resets your progress and extends the timeline significantly.
Worked Example
Scenario: An $8,000 credit card balance at 19.9% APR, paying $300 per month.
Step 1 — Monthly rate: 19.9% ÷ 12 ≈ 1.658% per month.
Step 2 — Check the payment covers interest: Interest-only payment = 1.658% × $8,000 ≈ $132.67. Since $300 > $132.67, the balance will shrink.
Step 3 — Months to payoff: Using the formula n = −ln(1 − r×balance÷payment) ÷ ln(1+r) ≈ 31 months.
Step 4 — Total interest: Total paid ($300 × 31 ≈ $9,300) minus original balance ($8,000) ≈ $1,300 in interest.