To figure out the timeline for your payoff, you must know three key figures:

• Your debt balances
• The interest rate on those balances
• How much money you pay every month

Armed with these details, you can identify a payback timetable and put it on your calendar as a day for celebration.

How To Use the Debt Payoff Calculator

The time it takes to pay off your credit card balance is mostly defined by how much you pay each month. The more you pay, the shorter the time.

For this reason, beware of only making the minimum payments on any revolving credit account, like credit cards. Minimum payments only extend the time it takes to pay off the debt.

You can change your timeline by changing your monthly payment. And you can prove that out by using our debt calculator and changing the monthly payment amounts.

Plug in how much you owe, the interest rate and how much you pay each month. Change your monthly payment amount to change your timeline. The credit card payoff calculator can help you reduce the amount of interest fees you pay.

How Is Interest Calculated on Credit Card Debt?

To understand how credit card interest is calculated, you must have another set of numbers in hand: your annual percentage rate (APR), your average daily balance and the number of days in your billing cycle.

Here’s how those numbers work to produce a monthly interest payment for a credit card balance:

Convert your APR to a daily rate: The conversion calculation: APR ÷100 ÷ 365 = Daily Rate. If your APR is 20%, the debt payoff calculator will show your daily rate of 0.000547. You can find your APR listed at the top of your monthly statement.

Get the average daily balance: This balance is the average unpaid balance you owe on the card throughout a monthly billing cycle. To calculate it, add all the daily balances through the month using the credit card payoff calculator. Divide the result by 30 days (or 31 days, depending on the month).

Multiply the daily rate by the average daily balance: Take the results from Step 1 and Step 2. The result is your monthly interest payment.

Consider a case where your average daily balance is $1,400, and the daily periodic rate is 0.000547. In that case, the daily interest rate would be 0.77 ($1,400 x 0.000547). For a 30-day billing cycle, the monthly interest would total $23.10 ($0.77 x 30).

How To Pay off Credit Card Debt

If you owe money on a credit card — or multiple cards — you can pay off the balance(s) in several ways. The most obvious is to use funds from your checking or savings account to reduce or eliminate the balance due.

If you don’t have enough money in your bank accounts, you can use a no-interest credit card by transferring a balance to it. The 0% interest cards normally allow a 12-18 month payoff period before the introductory period expires and the interest rate zooms to around 20%.

Or you can prioritize each card, paying your most expensive debts first (avalanche method). You can also clear off debts starting from the smallest to the largest (snowball method).

Each method has merits. Let’s look at them.

0% Balance Transfer Card

A balance transfer card lets you move the balance owed on an existing high-interest credit card to a new card with a 0% introductory APR. The new credit card company will charge you 0% — usually for 12 to 18 months — regardless of the size of the transfer.

Anyone can apply for a balance transfer credit card, but you must give the amount you want to transfer. By transferring your current debt to this new card, you can pay off your debt faster.

This strategy helps combine debt payments if you can transfer multiple balances onto one card.

The biggest drawback? There is typically a transfer fee involved (3% of the balance transferred) and it can be hard to qualify for a quality balance transfer credit card. You need strong credit – a credit score of 680 or higher -- to qualify.

Debt Consolidation

Having multiple cards can make it hard to prioritize payments and make consistent on-time payments. Debt consolidation is a debt-tackling tactic that wraps up all your debt in one place, making it easier to pay the bill on time every month.

One advantage of debt consolidation is a lower interest rate. If you have good credit, you likely will qualify for a low-interest card when you consolidate debts. A credit score of 680 or higher puts you in the game for a card with a lower interest rate.

However, even with a less-than-stellar credit score, you could qualify for a debt consolidation loan that has a lower interest rate than your credit cards have.

Know that consolidating debt can temporarily lower your credit score by five or more points. And because consolidating credit card loans turns them into personal loans, you may have an increased repayment period.

You could also have added costs, such as origination fees charged for the consolidation.

Debt Snowball Method

The snowball repayment method has a basic tenant of paying off your smallest debts first and working your way up to larger debts. As you roll repayment money from a tiny debt to the next, the amount “snowballs” (gets larger and larger). The debt snowball method helps you clear off your debts faster.

The debt payoff calculator will show that your repayment amount grows. This means that as the months progress, you free up more money to clear your larger debts.

The biggest drawback is that, unlike the other debt clearance methods, debt snowball has zero impact on your interest. Input your essential data into the credit card payoff calculator to figure out how much you can pay monthly.

Debt Avalanche Method

The debt avalanche method is the opposite of the debt snowball method. Here you focus on paying off the highest interest loans first, then move to the next-most expensive loan.

This tactic saves you the most money because you won’t pay as much in interest charges. Larger balances generate larger interest fees, often even if the interest rate is lower than one on another credit card. A good debt payoff calculator can pinpoint the exact amount of interest you’ll owe.

Although there is a greater possibility of saving money with the debt avalanche plan, you must be disciplined and make at least minimum payments on your other debts. You can’t miss a payment. If possible, pay extra every month, not just the minimum.

The avalanche method speeds up debt-free living if you stick to the payment plan generated by your credit card payoff calculator. Your credit use reduces as you move from expensive to affordable debts.

Get Help With Your Credit Card Debt

By looking at details of your credit card debt, you can use our credit card payoff calculator to figure out the best repayment plan for your debt.

But if you need help beyond the debt payoff calculator, we can help. Contact us for credit counseling. We will do a full review of your income, debts and expenses and recommend a debt-relief option – debt management, debt consolidation, debt settlement or bankruptcy – that is best suited to your situation.