Credit Card Payoff Calculator

Do you have extra money to pay off your credit card debt each month? Use this Credit Card Payoff Calculator to figure out how quickly you can pay off your credit card debt by adding extra money to the payments. This calculator is especially helpful if you are using the debt snowball method of debt repayment.

You don’t need an accounting degree from the Wharton School of Business to know you must make more than minimum payments if you’re going to conquer credit card debt.

But just how much difference can larger, or extra, payments make? Glad you asked.

The InCharge Credit Calculator cuts to the chase: It demonstrates, in compelling fashion, how much quicker you can eliminate credit card debt by coming up with, and committing to, payments over and above the minimums required by the lender.

The alternative is depressing. At 14, 18, sometimes even 25%, your credit card debt is working overtime for your lenders. Noodling with our calculator, you will see the best way to get them off your back so your money starts working for you again. Extra payments, or payments above the minimum, are the surest ticket to financial emancipation.

Stipulated: Almost everyone gets squeezed on occasion. When that happens, paying the minimum — before the due date so late penalties aren’t added to the principle — can be a necessary evil. But paying the minimum month after month is a terrible idea, as our calculator shows.

Let’s check it out.

Credit Card or Loan Information

• Credit card balance: This is what you owe to Chase or Capital One or Macy’s. You can find the figure via your online account, or on your last printed statement (although accrued interest will have added to that number as of the closing date), or by calling the toll-free number on the back of your card.
• Annual percentage rate (APR): This, too, can be found online, on your statement, or by calling the toll-free number.
• Proposed additional monthly payment. To get a baseline, enter zero. Later, you can try various dollar amounts to figure what sort of an impact you can have by making larger, or extra, payments.

Assumptions

• Minimum payment percentage: The default number is 4%, a fairly common number for maintaining your credit card debt in good standing. Your results may vary from card to card.
• Minimum payment amount: Credit card lenders establish minimum payments that, on small balances, can be higher than the minimum payment percentage. This information, too, is available online, on your statement, or over the phone.
• Skip December payment when offered? Credit card companies occasionally offer clients in good standing to skip their December payment. This may sound generous, but actually it’s a way to allow interest to accrue, growing your debt.
• Desired table display: You can see the results by year or by month.

How to Use the Credit Card Payoff Calculator

For this example, let’s assume I owe Chase, which issued my Visa card,  $2,000 at 18%. Keeping my account in good standing requires a minimum payment of 6% each month. Let’s run the numbers,  assuming only minimum payments, I take the skip-December option, and I stop using the card altogether.

Under that scenario, it takes me 83 payments — nearly seven years — to pay off the remaining balance. My interest payments total $737.

Consider, now, if I am somehow able to come up with an extra $50 each month and not skip December. The calculator reveals a gratifying result: My balance goes to zero in just 23 months, five years sooner than minimum only payments; and I pay only $294 in interest, a savings of $433.

Even if I can’t come up with any more than an extra $5 a week — maybe I switch from premium gas to mid-grade, as AAA recommends — if I put that $20 toward my Visa balance, the calculator reports I’m out from under in 36 months, nearly four years sooner, and I save $318.

Again, your results may vary. The important thing is to let the calculator help you gauge your options.

Get a Strategy You Can Live With

Generally, there are two strategies for attacking credit card debt. They tend to be described as the debt snowball and the debt avalanche.

In the debt avalanche, you go after the balance with the highest interest rate first, because it’s the one that — all other things being equal — is doing your budget the most harm. When that one’s paid off, you turn to the next highest, and then the next highest, and so on until you’ve paid off every card you own.

In the debt snowball, borrowers make timely minimum payments across the board — because they want to stay current while they right their financial ship — then throw whatever surplus they have at their smallest balance. Pay it off, close the account, and move to the next smallest balance.

Studies indicate the debt avalanche method saves more money over the long haul, but that the snowball approach — because it rewards its practitioners with early wins and steady, tangible success — leads to more successful outcomes.

Conquering Your Credit Card Balances

Anymore, squeezing your budget, no matter where you fall in the income strata, is a good idea. Not just for you, but the economy as a whole. A recent Wall Street Journal article noted a key reason for the tight lid on pesky inflation: shoppers comparing prices using their mobile phones.

Serious comparison shoppers also are using a wide array of apps that Hoover up coupons and other special deals. Once upon a time, however, extreme couponing was a test of will and patience.

Not any more. “Best mobile coupon apps” is a search you ought to consider running every couple of weeks — that’s how fast the landscape changes. Just now, the heavyweights are SnipSnap (a virtual coupon envelope), Yowza (retailers push special offers your way), CardStar (scan your loyalty cards into the app), Coupon Sherpa (search for and save grocery products to your virtual wallet), and Checkout51 (scan your receipt for missed opportunities; they’ll be deposited into your Checkout51 account, which you can redeem whenever your balance hits $20).

What are we doing with these savings? We’re applying them to our credit card balances, is what.

There are plenty of other ways to shore up your budget.

• Review your insurance plans. If you could you sleep nights with slightly higher deductibles, you might be able to trim your premiums.
• Examine your mobile service. Are there perks you aren’t using or could live without? Call your provider and cut a new deal. (Sometimes, in exchange for extending your contract, you can get your monthly charges trimmed and suffer no loss of services.)
• Are you paying for streaming services you don’t absolutely adore? End them. Did you know you can borrow DVDs — everything from classics to recent releases — from the library?
• Still have cable? Call your provider; ask for the sales department and negotiate. Or research what a new customer would pay for your current package, and ask your provider to match it.
• Nobody wants you to live like a hermit while you’re paying off your credit card debt, but whenever you go out, try to take advantage of cost-saving opportunities offered by GroupOn or LivingSocial.
• Dying to try the restaurant everyone’s talking about? Go at lunch. While the menu will be substantially similar, the portions are likely to be smaller — good for your waistline — and the prices cheaper.
• Save on your power bill(s) by adjusting your thermostat on your central air/heating … and on your water heater.

Pursuing any or all of these strategies does not mean you’re suddenly cheap or miserly. Instead, it means you’ve become thrifty and wise. And you’d rather have your money work for you than the faceless multinational bank.