Credit Card Payoff Calculator

Purpose and model boundary

Use this to see what a statement's minimum payment actually costs over its whole life, and what paying a fixed amount instead buys you. The same balance is run to zero twice: once at a fixed monthly payment you choose, and once at a minimum payment of the shape most issuers use, the month's interest plus a share of the balance with a money floor underneath, where you supply the share and the floor from your own statement.

It prices one balance you have stopped adding to. Nothing charged to the card after today is counted, and no annual fee, late fee, penalty rate or rewards value is modelled.

Inputs and units

Governing relationships

Both paths are followed month by month. Each month is charged one twelfth of the annual rate on the balance standing at the start of that month, the payment for that month is applied, and what remains carries forward.

On the fixed path the payment is the same every month, except in the last month, where it is trimmed to whatever is actually owed plus that month's interest.

On the minimum path the payment is recomputed every month as that month's interest plus the stated share of the current balance, lifted to the money floor whenever that sum falls below it, and trimmed to what is owed on a very small balance. That is the shape of the rule, and it is why the minimum payment falls month after month while the balance is large and then stops falling once the floor takes over.

What the fixed payment buys is the difference between the two paths: the months it saves and the interest it never has to pay.

Calculation sequence

This is the order in which the reported figures depend on one another, each step traceable to what the calculator says a figure is built from. It is not a claim about the order in which the workbook evaluates its own cells.

1. Charge the first month of interest on the balance, which is the figure that decides whether any payment is large enough to make progress at all.
2. Work out what the issuer would ask for in the first month under its own rule, so the fixed payment has something to be compared against.
3. Run the fixed payment path to zero, accumulating the interest charged and the total handed over.
4. Run the minimum payment path to zero the same way, recomputing the payment every month.
5. Subtract the fixed path's months from the minimum path's to get the months saved, and its interest from the minimum path's interest to get the interest saved.
6. Rerun the fixed path across a grid of monthly payments and annual rates, so the sensitivity of the answer to each is visible rather than asserted.

Outputs and interpretation

Model Status reads OK, or explains why the inputs are not valid or why the answer deserves a second look before you act on it. It is shown alongside the results rather than in place of them.

The calculator also returns a grid that reruns the fixed payment path across a range of payments and rates at once. Its axes, corner and body arrive as separate values and are the grid's parts rather than results to read on their own; the page assembles them into the table.

Every figure above is returned by the model. The page arranges and formats them; it computes none of them.

Validation and status logic

These are the states the delivery's own recorded runs exercise, so the table records what this calculator has been observed to return rather than every branch it could take. A figure that moves with the inputs is shown as ….

Assumptions and limitations

• Interest is charged once a month, at the annual rate divided by twelve, on the balance at the start of the month. An issuer charges on the average daily balance, so a single month here can differ from a statement by the timing of payments inside it.
• The rate is constant for the whole payoff. A promotional rate ending, or a penalty rate applying after a missed payment, is not modelled.
• Nothing is charged to the card after today. A card still in use has no payoff date, which is the reason that assumption is made rather than an oversight.
• The minimum rule is a common shape, not a universal one, and the share and floor are yours to set rather than figures this page asserts. An issuer using a different rule, such as a flat share of the balance with no interest added, will ask for a different amount and take a different number of months.
• Fees of any kind, rewards, and the value of anything bought on the card are all outside the model.

Restrictions and non-computing states

This calculator enforces the numeric limits recorded above before either path is run, so a value outside them is refused rather than answered.

Both paths are followed for a limited number of months. A minimum payment that barely covers its own interest can take longer than that, and where it does the run stops at the limit and the status line says so rather than reporting the limit as if it were a payoff.

Errors and warnings

NOT VALID means the inputs do not describe a question this calculator can answer, and the figures beside it should not be relied on. CHECK is not an error: the arithmetic is sound and the figures stand, but something about the combination is worth knowing first, such as a payment that cannot make progress against its own interest. The status is shown with the results rather than in place of them, so a flagged answer is still a readable one.

A value the page itself refuses, because it falls outside the limits above, is rejected before the calculation is requested and no figures are returned at all. That is different again from a transport or service failure, where the page reports that the result could not be fetched rather than showing a stale or partial one.

The minimum payment rule modelled here is the larger of a money floor or a share of the balance, with the month's interest added, and the balance itself once what is left is smaller than either. The share and the floor are yours to set: the calculator takes them as inputs rather than asserting them, because issuers differ and each publishes its own method. Card agreements generally state that method in the pricing terms or Rates and Fees Table that accompanies the agreement rather than in the agreement's main text, so the figure to trust is the one on your own statement. The calculator reports the first month's minimum precisely so you can check it against one.

The two assumptions the minimum payment path makes, that only the minimum is paid and that nothing further is charged to the card, are the same two the statutory minimum payment disclosure box requires; see the Consumer Financial Protection Bureau's Regulation Z Appendix M1.

These sources provide background; they do not supply the calculator's assumptions or certify its result. This calculator is informational and is not financial, investment, or tax advice. Results follow directly from the balance, rate and payments you enter, and a real card whose balance keeps growing has no payoff date at all.