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.
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.
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.
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.
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.
Valdes-Dapena, P. (2017, Dec. 12), “Turns out ‘recommended’ Premium doesn’t do much.” Retrieved from http://money.cnn.com/2017/12/12/autos/aaa-premium-gas-study/index.html
Torry, H. and Stevens, L. (2017, Dec. 12), “As the Fed Deliberates, Amazon is Making Its Job More Difficult.” Retrieved from https://www.wsj.com/articles/u-s-shoppers-wield-smartphones-to-keep-a-lid-on-consumer-prices-1513036486
Becker, M. (2015, March 13), “How Much Money Is the Debt Snowball Method Costing You?” Retrieved from: http://www.magnifymoney.com/blog/pay-down-my-debt/much-money-debt-snowball-method-costing92943682/
Berger, R. (2017, July 20), “Debt Snowball Versus Debt Avalanche: What the Academic Research Shows.” Retrieved from
Curtis, J. (NA), “8 Best Mobile Coupon Apps to Save Money Shopping With Your Smartphone.” Retrieved from https://www.moneycrashers.com/best-mobile-coupon-apps-smartphone/
NA (2017, Oct. 31), “How to Squeeze $500 Out of Your Monthly Budget.” Retrieved from https://hopeandcents.com/how-to-squeeze-500-monthly-budget/