How to Calculate a Credit Card Payoff
One of the most important steps to financial peace of mind is paying off debt. If you have credit card debt, setting goals for paying it off early can save you hundreds of dollars in interest. Knowing how much you need and how long it will take will help you to stay on track and remain motivated to get out of debt. Here's how to calculate a credit card payoff.
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Instructions
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How to Calculate a Credit Card Payoff
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1
List all of your debts. List the names of all your credit cards, and add columns for the balance, the interest rate, and theminimum monthly payment.
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2
Calculate the number of months before each card is paid off. Add another column for the number of months, and divide the balance by the minimum monthly payment for each card.
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3
Determine which of your cards has the highest number of months before it is paid off. If you continue paying the minimum each month on your credit cards, this amount is the number of months before your cards are completely paid off.
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Consider paying more than the minimum to reduce the time it takes to pay off your cards. Investment adviser and syndicated newspaper columnist Terry Savage says that paying double the minimum on all your cards will allow you to retire your credit card debt in three years or less.
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Tips & Warnings
Once your account is paid, leave the account open. Having an account open with a zero balance will help to improve your credit score.
Stop using your credit cards while trying to pay them off. You will sabotage your progress if you continue to rack up debt.
