Credit Card Equation

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Equation / Last modified by KurtHeckman on 2019/02/18 17:36
KurtHeckman.Credit Card Equation

The Credit Card Equation calculator computes the amount of time required to payoff a credit card, or other fixed rate loan, based on the (APR), total balance (b). and monthly payment (p).  

INSTRUCTION:  Choose units and enter the following:

  • (APR) The annual percent rate of interest 
  • (b)  The balance of the credit card debt
  • (p)  The monthly payment to be made.

Payoff Time (N): vCalc will return the time to pay off the credit card in months.  However this can be automatically converted to other time units (e.g. weeks or years) via the pull-down menu.

Personal Finance Equations:

The Math / Science

The formula for the credit card equation is:

       `N = - 1/30 * ln(1 + b/p*(1-(1+"APR"/365)^30))/ln(1+"APR"/365)`


NOTE: This payoff period assumes a fixed rate of interest AND that no other principle is added to the balance.

The Credit Card Equation calculator calculates the number of months (N) to pay off a credit card with a fixed annual rate (APR) based on a regular payment (p) against a standing debt (b).  APR is listed in the credit card contract and may appear on the credit card statement.  An article from Value Penguin cites that APRs have an average between 16% and 18% based on the type of card.  

This formula is very useful in determining whether additional payments or increased payments should be made in order to pay off a credit card in an acceptable period.


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