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Monthly Payment Formula:
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The Credit Card Repayment Calculator helps determine the fixed monthly payment needed to pay off a credit card balance over a specified period, considering the interest rate. It uses the standard loan amortization formula to calculate payments.
The calculator uses the formula:
Where:
Explanation: The formula calculates the fixed monthly payment required to pay off the entire balance including interest over the specified period.
Details: Calculating accurate monthly payments helps in budgeting, debt management planning, and understanding the total cost of carrying credit card debt over time.
Tips: Enter the current balance in currency, annual interest rate as a decimal (e.g., 0.18 for 18%), and the desired repayment period in months. All values must be positive numbers.
Q1: Why is the rate divided by 12 in the formula?
A: The rate is divided by 12 to convert the annual interest rate to a monthly rate since payments are made monthly.
Q2: What if I want to pay off my balance faster?
A: Enter a smaller number of months to see the higher monthly payment required to pay off the balance more quickly.
Q3: Does this calculator account for minimum payments?
A: No, this calculator calculates the fixed payment needed to completely pay off the balance in the specified time period, which may be higher than minimum payments.
Q4: What is the difference between decimal and percentage rate?
A: Decimal rate is the percentage divided by 100 (e.g., 18% = 0.18). Make sure to enter the rate in decimal form.
Q5: Can this calculator be used for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan with monthly payments, including personal loans and auto loans.