### 6 Tips to Save Using the Most Popular Food Delivery Apps

With Microsoft Excel you can solve complex calculations and formulas rapidly. You can even use this software to calculate the amount of credit card interest you owe to your card provider. When you use Excel to perform these calculations, you do not have to spend much time writing things down because the software does most of the work for you. If you have your credit card statements available and understand how to create cells and formulas, you can calculate interest payments on Excel using built-in features of the program.

## Set Up Your Spreadsheet

First, set up some headers so that you or anyone else can quickly tell what the different columns in your spreadsheet refer to.

Title your A1 cell “Interest.” Title your B1 cell the word “Period.” Title the third cell or C1 “Total.” Title D1 “Card Value.” Title E1 “Payment.”

## Enter Your Monthly Rate

Enter your monthly interest rate in A2. You can get this figure by dividing your rate of interest by the number 12. Your annual interest rate should be available on your credit card statement or online at your credit card company’s website. If you can’t find it, contact your credit card company for help.

## Enter Number of Months

Enter the precise amount of periods, usually months, for which you desire to count the interest payment in B2. For example, from your card origination date to the conclusion of your first month, enter the number “0.” For month number one, enter “1.”

## Enter Your Total Payments

Enter the total sum of your payments for your card in C2. For example, if you plan to pay your card off in four years, multiply 4–the number of years–and 12–the number of months in each of those years–to figure out the number of times you must make a payment.

## Enter the Amount Owed

Type the amount of money you’ve spent on your credit card or plan to spend in D2. For instance, if you have a $35,000 credit line and plan to max out your card or have already hit that credit limit, type $35,000. If you’re not sure of your card balance, check your most recent statement, visit your credit card company’s website or give the company a call.

## Use the Interest Formula

Enter the command “ISPMT (A2,B2,C2,-D2)” in E2. This built-in Excel formula allows you to measure the amount of interest you paid or will during a certain time.

Our new **Credit Card Payment Calculator** will help you calculate your minimum payment and estimate how long it will take you to pay off your credit card by making either **minimum payments** or fixed payments. See below for more information about how to **calculate the minimum payment** on your credit card.

This calculator will help you realize just how much it really costs to pay the minimum on your credit card. There IS one case in which it might actually be beneficial to only pay the minimum. Read on below to find out when.

Unlike our debt reduction calculator and credit card payoff calculator, this spreadsheet lets you see how long it will take to pay off your credit card if you make only the **minimum payment** month-after-month.

## Credit Card Payment Calculator

#### Other Versions

#### Template Details

*“No installation, no macros – just a simple spreadsheet” – by Jon Wittwer*

### Description

This credit card **minimum payment calculator** is a simple Excel spreadsheet that calculates your minimum payment, total interest, and time to pay off. It also creates a payment schedule and graphs your payment and balance over time.

You can now add **extra payments** into the Payment schedule to see how making occasional extra payments could help you pay off your credit card faster (see the screenshot). You can also choose to make Fixed Monthly Payments instead of paying the minimum payment.

*Update 10/16/2016* (.xlsx version only): I have added an optional 0% Introductory Period so that you can simulate paying off a card or doing a balance transfer to a card offering 0% interest for a number of months.

## How to Calculate the Minimum Credit Card Payment?

The minimum payment on your credit card is usually either a percentage of the current balance (2% – 5%) or a minimum fixed dollar amount (like $15.00), whichever is greater. The minimum payment might also be defined as the interest plus a percentage of the current balance. Check the fine print on your credit card agreement to determine how your credit card company defines your minimum payment.

### Interest-Only

This is the minimum possible payment that you could make to avoid having your balance increase. But, if you only only pay the interest month-to-month, you’ll never pay off the credit card. The basic calculation for the monthly interest-only payment is:

(Annual Rate / 12) * Balance

If your interest rate was 18%, then the monthly interest rate would be approximately **18% / 12 = 1.5%**.

### Percent of Balance

Credit cards are a type of revolving line of credit that don’t have a specific amortization period defined. So, to ensure that each payment includes interest plus some portion of the principal, the minimum payment is defined as a percentage that is greater than the monthly interest rate. This percentage will usually be between **2% and 5%**.

### Interest plus Percent of Balance

Some credit cards may define the minimum payment as “X% of the balance plus interest” – especially cards where the interest rate is allowed to change. Defining the minimum payment like this ensures that the credit card payment will always cover interest plus X% of the principal balance.

In the credit card payment calculator, enter the X% in the “Min Payment % of Balance” field and then check the “Plus Interest” box.

### Fixed Dollar Amount

When your balance gets low, the “Percent of Balance” calculations might result in a very small minimum payment, and in theory you’d never actually finish paying off the balance. So, there is almost always a minimum fixed dollar amount, usually about **$15.00**.

In the credit card calculator, you enter the $15.00 minimum value in “Min Payment for Low Balance” field.

### 0% Interest Period

Some companies offer 0% interest for a number of months to entice you to sign up for their new card. After the 0% introductory period, the interest rate rises to the normal high rate. You can use the latest version of this spreadsheet to simulate that scenario, but be aware that missing a payment can cancel the introductory period.

## How is Credit Card Interest Calculated?

For credit cards, interest is usually accrued **daily** or based on the **average daily balance**, but most credit card calculators estimate the monthly interest by assuming that (1) the balance is constant and (2) the interest rate is the annual rate divided by 12. This is a *pretty good estimate*, but probably won’t be exactly what you see on your monthly statement.

## Minimum Payments vs. Fixed Payments

The credit card payment calculator lets you enter a Fixed Monthly Payment amount. If you do, that amount will override what you have entered in the Min Payment fields. If the fixed payment is the same as or greater than the first minimum payment, you will generally **pay off the credit card much sooner** and **pay much less interest overall**.

Why? If you are only making minimum payments, the minimum payment decreases as the balance decreases, so you aren’t paying as much of the principal from month to month. Our credit card calculator can help you see just how much the difference might be.

## When Should I Pay only the Minimum Payment?

There may be extenuating circumstances where you might want to only make a minimum payment (such as lack of money).

There is also a case where it may be **mathematically beneficial** to pay the minimum. And that is . if you are using the snowball method to pay off multiple credit cards.

Using the snowball method, you can pay less overall interest and pay off debts faster if you pay off the credit card with the highest interest first and make only minimum payments on the other credit cards. This assumes that you are allocating a fixed total amount to paying off your debts so that everything left over after making the minimum payments on the other credit cards goes to paying off the one with the higher interest rate.

**Credit Card Debt Payoff Spreadsheet for Calculating Your Credit Card Payoff Schedule**

According to Experion, one of the three major credit reporting agencies, the average American has slightly over $6,000 worth of credit card debt. But even this doesn’t show the complete picture.

For example, ValuePenguin, a company that helps people choose the best credit cards reports that the average household with only $5,000 to $10,000 in total assets, has nearly $5,000 worth of card debt, and those in the $1 to $4,999 worth assets own almost there total net worth in credit card debt of around $4,000, many of them, presumably Credit Card Debt Payoff Spreadsheet Being college students.

It’s fundamentally clear, therefore, that many people are heading for a fall, sooner or later with their credit card payments, and in order to get on a solid financial footing, they need a tool such as a Credit Card Debt Payoff Spreadsheet.

A Credit Card Debt Payoff Spreadsheet helps you calculate interest-only credit card payments (strongly not recommended because paying only the minimum amount may extend the total amount of you own by 3 or 4 additional years of payment,) months to payoff making a standard payment based upon what you owe, and payoff goal, the latter being the most critical.

For example, if your goal is to pay off a particular credit card within 36 months, it will calculate for you exactly how much you need to send in each month to retire the debt.

It is important to note that all Credit Card Debt Payoff Spreadsheet excel sheets make the assumption that your interest rate will remain the same throughout the history of your loan, and also that they don’t take into account any late fees.

So a Credit Card Debt Payoff Spreadsheet excel payoff sheet isn’t perfect, but as a guide, it can help point out the best strategies to handle your credit cards.

**The snowball technique**

One of the techniques financial advisors recommend is called the snowball technique.

Let’s say you have a total credit card debt of $6,000, spread over 3 credit cards.

You owe $2,000 on each credit card.

Credit card A has a fixed rate of 12 percent. Card B has a fixed rate of 14 percent, and Card C. has a fixed rate of 18 percent.

If you paid credit card A at a rate of $100 per month, it would take you 23 months to retire credit card A., and you would pay $242 in interest. Making the same $100 payment with Card B. It would still take you 23 months to retire the card, but you would pay $290 in interest. Retiring Card C however, would take you 24 months to pay, and you would pay a whopping $395.

Using the snowball technique you would pay the minimum payment, which is around $40 to $43 for Cards A and B each, but pay $220 a month towards Card C. Doing this, Card C would be completely retired in 10 months, and you would pay only $166 in interest.

Once Card C was retired, don’t use it anymore, or even consider canceling it, and then continue making minimum payments for Card A. but pay $260 a month towards Card B. By following this plan Card B would also be paid off within 10 another 10 months, and you would pay only $107 interest on it.

Within 20 months, you could be well on your way to credit card stability using a Credit Card Debt Payoff Spreadsheet template.

Of course, a Credit Card Debt Payoff Spreadsheet template is only as good as your determination and willpower.

1. Make a determination to pay off your credit card debt

2. Call and ask for a better interest rate

If you inform a company you plan on retiring their card and never using it again unless they lower your interest rate, you may be pleasantly surprised to find out they will do it. However, even if they drop it, continue to plan on retiring it unless the rate goes below your lowest credit card.

3. Shred-it if you have no willpower

Your payoff plan won’t work if you have no willpower, and keep using the card up to its maximum limit. If necessary, use scissors and shred it to pieces. Then keep it in a scrapbook as a memento of your resolve.

Don’t cancel it though, because that may lower your credit score. Just don’t use it.

4. Budget your payments

Get an overall budget spreadsheet as well and plug it into the budget. At the same time, look for other non-essentials like your inflated cable bill or your cell-phone bill to see if there isn’t even extra money to send each month.

Pay it each and every month until it is zero, and don’t slack off after you have one or two cards retired. Keep your credit card borrowing to a minimum.

**How to use**

Simply download the spreadsheet and plug in the numbers. Even a child could follow the instructions. Everything is completely laid out for you, and then all you need to do is calculate it and budget your credit card expenses.

When you see how much money you can save by following the snowball plan, it’s relatively painless.

Managing personal finances can be a challenge, especially when trying to plan your payments and savings. Excel formulas can help you calculate the future value of your debts and investments, making it easier to figure out how long it will take for you to reach your goals. Use the following functions:

PMT calculates the payment for a loan based on constant payments and a constant interest rate.

NPER calculates the number of payment periods for an investment based on regular, constant payments and a constant interest rate.

PV returns the present value of an investment. The present value is the total amount that a series of future payments is worth now.

FV returns the future value of an investment based on periodic, constant payments and a constant interest rate.

Figure out the monthly payments to pay off a credit card debt

Assume that the balance due is $5,400 at a 17% annual interest rate. Nothing else will be purchased on the card while the debt is being paid off.

Using the function PMT(rate,NPER,PV)

the result is a monthly payment of $266.99 to pay the debt off in two years.

The rate argument is the interest rate per period for the loan. For example, in this formula the 17% annual interest rate is divided by 12, the number of months in a year.

The NPER argument of 2*12 is the total number of payment periods for the loan.

The PV or present value argument is 5400.

Figure out monthly mortgage payments

Imagine a $180,000 home at 5% interest, with a 30-year mortgage.

Using the function PMT(rate,NPER,PV)

the result is a monthly payment (not including insurance and taxes) of $966.28.

The rate argument is 5% divided by the 12 months in a year.

The NPER argument is 30*12 for a 30 year mortgage with 12 monthly payments made each year.

The PV argument is 180000 (the present value of the loan).

Find out how to save each month for a dream vacation

You’d like to save for a vacation three years from now that will cost $8,500. The annual interest rate for saving is 1.5%.

Using the function PMT(rate,NPER,PV,FV)

to save $8,500 in three years would require a savings of $230.99 each month for three years.

The rate argument is 1.5% divided by 12, the number of months in a year.

The NPER argument is 3*12 for twelve monthly payments over three years.

The PV (present value) is 0 because the account is starting from zero.

The FV (future value) that you want to save is $8,500.

Now imagine that you are saving for an $8,500 vacation over three years, and wonder how much you would need to deposit in your account to keep monthly savings at $175.00 per month. The PV function will calculate how much of a starting deposit will yield a future value.

Using the function PV(rate,NPER,PMT,FV)

an initial deposit of $1,969.62 would be required in order to be able to pay $175.00 per month and end up with $8500 in three years.

The rate argument is 1.5%/12.

The NPER argument is 3*12 (or twelve monthly payments for three years).

The PMT is -175 (you would pay $175 per month).

The FV (future value) is 8500.

Find out how long it will take to pay off a personal loan

Imagine that you have a $2,500 personal loan, and have agreed to pay $150 a month at 3% annual interest.

Using the function NPER(rate,PMT,PV)

it would take 17 months and some days to pay off the loan.

The rate argument is 3%/12 monthly payments per year.

The PMT argument is -150.

The PV (present value) argument is 2500.

Figure out a down payment

Say that you’d like to buy a $19,000 car at a 2.9% interest rate over three years. You want to keep the monthly payments at $350 a month, so you need to figure out your down payment. In this formula the result of the PV function is the loan amount, which is then subtracted from the purchase price to get the down payment.

Using the function PV(rate,NPER,PMT)

the down payment required would be $6,946.48

The $19,000 purchase price is listed first in the formula. The result of the PV function will be subtracted from the purchase price.

The rate argument is 2.9% divided by 12.

The NPER argument is 3*12 (or twelve monthly payments over three years).

The PMT is -350 (you would pay $350 per month).

See how much your savings will add up to over time

Starting with $500 in your account, how much will you have in 10 months if you deposit $200 a month at 1.5% interest?

Using the function FV(rate,NPER,PMT,PV)

in 10 months you would have $2,517.57 in savings.

Download a **free Credit Card Payoff calculator** for Microsoft Excel or Google Sheets that will calculate the payment required to **pay off your credit card** in a specified number of years, or calculate how long it will take to pay off your card given a specific monthly payment. You can also use our new online calculator, but if you want to see exactly how the formulas work, download the spreadsheet.

For an even more powerful debt payoff spreadsheet, see our debt reduction calculator.

### Credit Card Payoff Calculator

Note: This calculator assumes a constant interest rate, and it does not take into account any late fees, future charges, or cash advances.

## Credit Card Payoff Calculator

#### Other Versions

#### Template Details

*“No installation, no macros – just a simple spreadsheet” – by Jon Wittwer*

### Description

What will it take to completely **pay off the balance of a credit card** at the current interest rate? Enter your current balance and interest rate. Then, enter a monthly payment to calculate how many months it will take to pay off the credit card, or enter the payoff goal to calculate what your monthly payment must be to meet that goal.

## Using the Credit Card Payoff Calculator

The following details explain how the calculator on this page works.

**Current Balance**: The calculator assumes you are paying off the unpaid principal. If you are actively using a card, then purchases made in the past month usually have a grace period of a month before interest is charged. This calculator does not take into account the grace period for recent charges.

**Interest Rate**: Unless you know to do otherwise, enter the Annual Percentage Rate (APR). Most APRs will fluctuate over time, and can be affected by late payments and other factors, but this calculator just assumes a fixed interest rate.

**Interest-Only Payment**: This is an *estimate* of the monthly interest due, calculated by multiplying the current balance by the monthly interest rate. The monthly interest rate is the annual rate divided by 12. Your monthly payment needs to be larger than the interest-only payment, or you will never pay off card.

The actual credit card interest calculation is usually based on daily compounding, but the monthly calculation is a pretty good estimate. The difference has more to do with the numbers of days in different months rather than the compounding period (although the compound period does have a small effect).

**Monthly Payment**: If you want to calculate the Months to Payoff, then enter the monthly payment amount. It is a fixed payment, meaning it does not change. It is not a minimum credit card payment, which can decrease over time as your balance decreases.

Part of your monthly payment will be used to first pay the interest due (the Interest-Only Payment amount), and the rest is applied to the principal. This assumes no fees, additional charges or cash advances. The interest portion of the payment will decrease as your balance decreases, but the monthly payment stays the same.

**Months to Payoff**: If you want to set a goal for when to have your card paid off, enter the number of months instead of the monthly payment. The Monthly Payment will then be calculated.

**Total Interest**: This is an estimate of the total interest paid by the time the balance is completely paid off and is calculated as *Monthly Payment* * *Months to Payoff* – *Initial Balance*. The total interest is useful for evaluating the cost of debt and comparing different payoff goals. The longer you take to pay off the card, the more interest you will pay. The graphs help show how the total interest decreases as you increase your Monthly Payment.

If you have any questions about how to use the spreadsheet or the online calculator, please contact us.

### Steps to Pay off Your Credit Card Debt

Are you trying to escape from the oppression of credit card debt? The following steps may not apply to your specific financial situation, but you may want to consider them .

**Lower It!**Call your credit card company(ies) and ask them to lower your interest rates. If you are considering debt consolidation as a way to lower your interest rates and zero-out your credit card balances, here is my take on debt consolidation.**Shred It!**Stop using your credit card(s). Shred them if you need to. But if you plan to use them again some day, don’t cancel them, because that can hurt your credit rating. You can always request a replacement card later.**Budget It!**Evaluate your home budget and cash flow to figure out what monthly payment you can afford. You may need to consider cutting back on spending or working some overtime. Just remember that the faster you can pay off the cards, the less interest you pay in the long run.**Calculate It!**Use the credit card payoff calculator to estimate how long it will take to pay off a card at its present interest rate.**Pay It!**Make your payments religiously, until the balance is zero.**Sustain It!**Just like the tendency to gain weight right after a diet, you may be tempted to rack up a balance on your credit card again. Don’t Do It. Learn from the past.

### Other Online Credit Card Payoff Calculators

Below is a list of online calculators used to check the spreadsheet, and a couple calculators that let you do a bit more fancy calculations.

- What will it take to pay off my credit card? : at
*Bankrate.com*. A simple credit card payoff calculator similar to the spreadsheet above. - Credit Card Payoff : at
*dinkytown.net*. This calculator lets you also include one or two future purchases, average monthly charges, and an annual fee.

## More Debt and Loan Calculators

- Debt Reduction Calculator
- Mortgage Payment Calculator
- Auto Loan Calculator
- Balloon Payment Loan Calculator
- Extra Payment Mortgage Calculator

### Resources and References

- Credit Card Info at
*FederalReserve.org*– Explains terms, helps you figure out how to pay if off, etc. - Choosing and Using Credit Cards at
*www.ftc.gov* - Lower Your Credit Card Interest Rate at
*Bankrate.com*– How to lower your rate with a simple phone call.

**Disclaimer**: This spreadsheet and the information on this page is for hypothetical and illustrative purposes only, and is not meant to be taken as investment or financial advice. Your individual situation is unique, and we do not guarantee the results or the applicability to your situation. You should seek the advice of qualified professionals regarding financial decisions.

## You’re a wiser consumer if you go behind the numbers

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Many people want to understand how their credit card payments are calculated. Knowing the specifics can help you make smart decisions and manage your debt. Good debt management starts with understanding how the payment is calculated and how each payment goes toward reducing your debt (or not).

Online credit card calculators provide some helpful numbers. But if they only show you a final dollar amount or “time to pay off the note” figure. You don’t learn where those numbers come from or their calculations. Perhaps you’re considering putting a major purchase on your credit card or strategizing a debt payoff plan. Either way, you’re a wiser consumer if you go behind the numbers.

Fortunately, the process of calculating your payments (and costs) by hand is not too difficult. If you can remember how to multiply—or get a calculator to do it for you—you’ll have everything you need.

## The Minimum Payment

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Start by figuring out the minimum payment required by your credit card company. That number is typically based on your balance.

*Example:* Your card issuer requires you to pay 3% of your outstanding loan balance. You owe $7,000 on your credit card. The minimum payment is 3% of $7,000, or $210. To find that answer, multiply $7,000 by .03 (which is the same as 3%—learn more about converting percentages and decimals).

Your card issuer determines your minimum payment, so you may need to ask which number to use. Learn how to find your minimum payment and understand common methods of calculation.

## First, the Interest

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When you make a payment, your loan balance doesn’t always decrease by the amount you pay. Your balance probably won’t go down by $100 if you make a $100 payment—unless you have a 0% interest loan and no other fees or charges. Each payment you make also goes toward the credit card company’s cut of the interest rate and other loan fees.

To figure out how much goes toward interest, you need another calculation. It is a fairly easy calculation—but there are a few steps involved.

- Find the interest rate that you pay on your card—12% APR, for example.
- Convert that annual rate to a monthly rate by dividing by 12—because there are 12 months in a year—so, in this example, you’d pay 1% per month.
- Multiply the monthly rate by your outstanding balance. As an example, use 1% times a balance of $7,000.
- The answer is how much you’re paying in loan interest—$70 in this example—each month.

The steps above illustrate a simplified monthly interest calculation. However, your card issuer might charge interest daily. If that’s the case, the calculation takes more work, but follows a similar process:

- In Step 2, convert to a daily rate by dividing the annual rate by 365 (it’s 0.0329%)
- Calculate the daily interest charge ($2.30 in this case)
- Add that charge to your account balance, for a new total of $7,002.30 after the first day
- Repeat the process for each day of the month

## Then the Principal

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After you pay interest, the remainder of your payment goes toward your debt—known as the “principal” part of your loan or the loan balance. Subtract the interest charges from your total payment to figure out how much principal you pay off in any given month.

In our example, your payment is $210, and the interest charges amount to $70. Subtract 210 – 70 = 140, so you pay off $140 of your loan this month. That brings your loan balance down to $6,860 for next month.

As you might have guessed, you need that number to calculate the next month’s payment. If you do this all by hand, the process is time-consuming, but calculators and spreadsheets can speed the process.

If you pay more than the minimum payment, which is typically a smart move, you pay down your loan balance faster.

The amount that goes toward interest this month is fixed—there’s nothing you can do about it at this point. But you can accelerate your debt repayment and pay less interest next month by paying more than the minimum.

## Many Months, Many Calculations

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You know how to calculate the payment and interest charges for a single month, but how can you calculate over longer periods?

It’s easiest to use a spreadsheet or a hand-built table to see the entire process of paying off your debt. The idea is the same as making an amortization table for a home or auto loan: Each row represents one payment.

It may take a small amount of spreadsheet wizardry, but you can take it slow or start with a template, and you’ll have a valuable tool. With each new row, look back at the loan balance at the end of the previous month (in the row above it). For a sample of how your spreadsheet might look, copy the images in this tutorial.

## Variations on the Theme

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mapodile / Getty Images

Now you have a basic understanding of how most credit card payments work. But every card issuer is different, and your card might have different features. With what you’ve already learned, you should be able to figure out how to calculate your own debt payoff with just about any card issuer.

- If your card has an annual fee, add that fee to your
*loan balance*when the fee is charged. - If your interest rate will change in the future, keep that in mind as you run the numbers and adjust the calculation.
- If you decide to skip a payment (which you probably shouldn’t do) for the holidays, make that month’s payment a zero.

Credit Card Payoff Calculator Template (Excel, PDF), Open Office that will calculate the payment which is required to pay off your all credit card debt in the specified number of the years. And calculate how long it will take to pay off the card given a specific monthly payment. This is a great spreadsheet to have in the debt reduction tool belt.

This **credit card payoff calculator excel template** is just an ordinary tool you easily can find online. I also have created this tool last year to help me get a better view of my credit card debts. You may also like Business Credit Application Template .

## How To Use Credit Card Payoff Calculator Excel Template?

Enter your credit card balance, interest rate, and the monthly payment. Then, choose whether you want or need to pay off with, fixed payments, and by a certain date. The list accommodates up to the 8 credit cards. If you select the minimum only payment option. The result tells you how long it will take to pay off the credit cards and how much interest and the principal you will have to ultimately pay.

The fixed payment option will detail you how much longer it will take to pay off the debt based on the fixed payment you enter. If you select the debt-free deadline and the credit card pay off calculator easily lets you know how much you have to pay each month to meet the timeline. The *fixed payment* and the debt-free deadline options are can very easily create a detailed repayment plan. You should also check the Debt Snowball Calculator Template .

The calculator displays the total credit card balance and the total minimum payments. It creates a repayment schedule based on the repayment strategy. The repayment schedule shows each credit card and also the monthly payment you make until the credit card is repaid. You can easily download a spreadsheet of the repayment plan for future reference.

Most people also know that how toughest part of paying off credit card debt is the commitment not to easily use it again for any transactions. Everybody can commit to their designated payoff plan. But, there is always a temptation to use it again and again with some consideration that they still have few budgets to pay. They also will earn some money to easily pay it later. But, it is much common also that they are running out of the credit card limits. And the money budgeted for the **credit card payment** is already spent on the other things.

If you want to know how much longer it will take you to pay off the credit card debt. And it will also tell you how much you have to pay to get rid of the debt faster. A **credit card payoff calculator excel template** is a thing that you need. Internet search results show thousands of pages of calculators. But not all of them are as really easy to use and give you the best results. You may also see Paypal Invoice Template .

This article is talking about calculating the interest payments per period based on periodic, constant payments and constant interest rate with Excel formulas, and the total interest payments as well.

#### Calculate monthly interest payments on a credit card in Excel

For example, you sign a credit card installment agreement, and you will pay your bill of *$2,000* in 12 months with annual interest rate of *9.6%*. In this example, you can apply the IPMT function to calculate the interest payment per month easily.

**1**. According to the information of your credit card bill, you can list the data in Excel as below screenshot:

**2**. In the Cell F6, please type below formula, and press the **Enter** key. See screenshot:

**=IPMT($C$6/$C$7,E6,$C$7*$C$8, $C$5)**

**3**. Keep the formula cell F6 selected, and drag its AutoFill handle down to the cells you will apply this formula.

Now the interest payments per month are figured out at once. See screenshot:

#### Calculate quarterly interest payments for a loan in Excel

Supposing you have a loan of *$10,000* from your bank, and the loan rate is *8.5%*. From now on you need to pay back the loan in quarterly installment in *2* years. Now you can also apply the IPMT function to calculate the interest payment per quarter easily in Excel.

1. According to the information of your loan, you can list the data in Excel as below screenshot:

2. In the Cell F6, please type below formula, and press the **Enter** key.

**=IPMT($C$6/$C$7,E6,$C$7*$C$8, $C$5)**

3. Keep the formula cell F6 selected, and drag its AutoFill handle down to the range as you need.

Now the interest payment of each quarter in the whole life of loan is figured out at once. See screenshot:

#### Calculate semi-annual interest payments on a car loan in Excel

Assume you are going to buy a car with a bank loan. The amount of this bank loan is *$50,000*, its interest rate is *6.4%*, you will repay the loan twice at the end of every half year, and the life of this bank loan is *5* years. In this case, you can easily figure out how much interest you will pay semi-annually easily with the IPMT function in Excel.

1. According to the information of your car loan, you can list the data in Excel as below screenshot:

2. In the Cell F6, enter below formula, and press the **Enter** key.

**=IPMT($C$6/$C$7,E6,$C$7*$C$8, -$C$5)**

3. Drag the AutoFill handle of this formula cell down to the range as you need.

Now the interest payment of every half year is calculated immediately. See screenshot:

#### Calculate total interest paid on a loan in Excel

Sometimes, you may want to calculate the total interest paid on a loan. For periodic, constant payments and constant interest rate, you can apply the IPMT function to figure out the interest payment for every period, and then apply the Sum function to sum up these interest payments, or apply the CUMIPMT function to get the total interest paid on a loan directly in Excel.

For example, you have a loan of *$5,000* with annual interest rate of *8.00%*. Now you need to repay it monthly in half year. You can figure out the total interest paid as follows:

**1**. List your loan data in Excel as below screenshot shown:

**2**. In Cell F3, type in the formula, and drag the formula cell’s AutoFill handle down the range as you need.

**=IPMT($C$3/$C$4,E3,$C$4*$C$5, $C$2)**

3. In the Cell F9, type in the formula **=SUM(F3:F8)**, and press the **Enter** key.

Now you will get the total amount of interest payments for the loan.

**Note**: You can also apply the CUMIPMT function to calculate the total interest payments.

**=CUMIPMT(C3/C4,C4*C5,C2,1,6,0)**

In above formula, C3/C4 will calculate the monthly interest rate, C4*C5 will get the total number of periods, C2 is the loan amount you received, 1 means the first period you will pay back the loan, 6 indicates the last period (there are 6 periods in total), and 0 indicates you repay at the end of every period.

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M ost of us probably forget much of the math we learned in high school or college. There are times, however, when a little math can help us with our finances. One such time is when we need to calculate the monthly payment on a loan

Whether we are considering a car loan, student loan, or perhaps a home loan, it’s a snap to calculate the monthly payment using Excel.

Before we get to Excel, however, there is an easier way. Use a loan payment calculator. I created one that you can check out here.

Now back to Excel. Let’s say you’re thinking about buying a car. For regular readers of the Dough Roller, you know my strong recommendation is never to borrow to buy a car. But stick with me here.

There are of course online calculators that you can use to find the monthly payment. But, frankly, I prefer to use Excel because it’s super easy and you can quickly change the interest rate, loan amount or length of the loan to see how the monthly payment will change.

So here’s how you do it:

In Excel, you’ll see at the top, above all the cells, the function bar.

(By the way, if you don’t have Excel, you can do this same thing for free in Google Drive. Just open up a spreadsheet in Drive and the functions are all the same. That’s actually what I’ve used to take these screenshots.)

In the function box, type the equal sign (=) and the function. In this case, we’re going to use the Payment function, which is abbreviated as PMT. So your function is “=pmt”:

Then, we’re going to enter three numbers in the parenthesis. The first is the interest rate. Since we’re going to calculate the monthly payment, we want the monthly interest rate.

The easiest way to do that is to enter the interest rate as a decimal divided by 12. For example, a 5% rate would look like this: .05/12.

Next, we’ll enter the number of months on the loan. For a five-year loan, for example, you would enter 60. Lastly, we’ll enter the amount of the loan. In this example, we’ll assume a $20,000 loan.

Close the parenthesis to end the function and hit enter.

In the cell you’ll find your monthly payment. In this case, it’s about $377.

It’s as simple as that.

Note that the number is negative because it represents payments you’ll be making on the loan. If you prefer to see this as a positive number, you can enter the loan amount as a negative number in the formula (e.g., -20000).

To see how the payment would change with different assumptions, simply change some or all of the numbers in the formula. For example, if we change the loan amount to $10,000, Excel immediately changes the payment to $188.

You can also change the interest rate and loan term. For example, let’s assume we want a $10,000 loan over a 30-month period instead of 60 months. Changing the formula to reflect these loan terms results in a monthly payment of $355.

These equations will help you manage your credit card debt. The math isn’t scary!

Running up a balance is easy, but paying it down is difficult. Your statement may suggest a minimum payment – but if you stick to this, you’ll be in debt for the long-haul.

You owe it to yourself to think about the math – it’s important! Knowing the equations gives you control – you can

- define a monthly payment and calculate how long it’ll take to pay down your debt
- or set your set a payoff date and calculate your monthly payments

## Credit Card Calculator

This Excel spreadsheet lets you experiment with payment amounts, APR’s and payoff times.

The download link is at the bottom of this article.

## How Much Interest are you Paying?

Credit card interest is usually compounded daily. Here’s an easy way of approximating the interest portion

interest charge = average daily balance in one month x APR x number of days in month / 365

Assuming an average daily balance of $8000 and an APR of 17.5%, the interest paid in month with 30 days is 8000 x 0.175 x 30 / 365 = $115.07.

Bear in mind that this is an approximation. Working out the precise amount of interest requires calculating the interest on the balance each day during the month.

## Calculate your Payoff Time

Let’s say you know your balance, your monthly payment and the annual interest rate. This equation gives the number of payments needed to reduce your balance to zero.

where

- n is the number of payments
- Pv is the credit card balance
- P is the periodic payment
- R is the interest rate

R is often defined as APR/12. If so, the number of payments n is in months.

Let’s say that your balance is $8000, monthly payment is $300 and the APR is 17.5%. Substituting these numbers into the equation gives

So the balance is paid off in just over 34 months.

This equation looks complicated, but is automated with Excel’s NPER function.

## Calculate your Payments

This equation can be rearranged to give the monthly payment in terms of the number of payments, interest rate and R. The equation isLet’s say that your balance is $8000, APR is 17.5% and the number of monthly payments is 34. Substituting these numbers into the equation…

…gives you a monthly payment of $300.11

Again, this equation is automated with Excel’s PMT function.

Credit card interest rates are painful. As unsecured debt, cardholders are charged higher interest rates than they pay for home or car loans. And since many tend to use their credit card for everyday purchases, they can wind up paying interest on all of their purchases, which starts accruing on the day of the purchase. At the same time, other cardholders continue to use their cards frequently while avoiding interest charges altogether.

**Credit Card Interest Made Simple**

The key to reducing, or eliminating, your credit card interest charges is to understand how it is calculated. Credit cards calculate interest charges based on your *average daily balance*. At the end of every billing period, the cardholder’s total unpaid balances at the end of each day are added up and then divided by the number of days in the statement cycle. So if you charge $1,000 on the first day of a 30-day billing period, then your average daily balance is $1,000, but if the charge is made on the last day of your billing cycle, your average daily balance is only one thirtieth of that, or $33.33.

Next, look at the interest rate, which is normally reported as an Annual Percentage Rate, or APR. To convert the annual rate to a daily, or periodic rate, divide it by the number of days in the year, 365. This will result in a very small number. For example, if your credit card as an APR of 15%, the periodic interest rate will be 0.000411%. Finally, you multiply the periodic interest rate by both the average daily balance and the number of days in the statement cycle, and that is the interest owed. So in the example of a $1,000 average daily balance at 15% interest during a 30-day statement, the total interest charge for the month would be $12.30.

That doesn’t sound so bad, but don’t forget how interest compounds. Some cards add interest charges to your daily balance once a month, while others add the interest every day that was accrued from the day before. When compounding daily, the effective interest rate of 15% APR is about 16.15%. This will raise the interest charges in our example to $13.27

**Now for the Good News**

Even though credit cards calculate interest on every charge, every day, nearly all will waive the charges when cardholders pay their entire statement balance in full and on time, before the statement due date. This period between the end of the statement cycle and the due date is known as the grace period, and it is your golden opportunity to avoid interest charges. In effect, the bank ends up loaning you money for free!

Nevertheless, when cardholders fail to pay off their entire balance, even by $1, or, worse, fail to make their payment on time, even by a single day, then they lose their grace period. Not only will cardholders owe interest on all their charges in their last statement cycle, but they will also begin paying interest on all the charges on the next statement cycle as well.

The grace period is lost until cardholders pay off their entire statement balance once again. Until that happens, every gallon of gas or loaf of bread purchased is accruing interest charges each day. Simply put, the way to always avoid credit card interest is to pay each month’s statement balance in full and on time.

**How to Minimize Interest Charges**

Unfortunately, most American credit card users do not pay off their entire balance in full each month, a process known as carrying a balance. While some may not have enough money available to pay the entire balance, others may hold the shortsighted belief that it is easier to pay a smaller amount each month and incur interest charges than to pay off the entire amount.

Thankfully, once you understand how credit card interest is calculated, there are some strategies to minimize your interest charges when you have to carry a balance. The key is to reduce your average daily balance as much as possible. For example, cardholders need not wait until their statement’s due date to make a payment. That date is merely the last date customers can make a payment to avoid late fees.

Instead, cardholders should make a payment as soon as they have the money available. Furthermore, there is no reason that cardholders can’t make multiple payments throughout the month. For example, a cardholder who is carrying a balance can reduce his or her interest charges substantially by making payments each week, perhaps on receipt of a paycheck.

Finally, those who pay their credit card issuer electronically will have their payment credited several days earlier than they would if they mailed it. This will further reduce the cardholder’s average daily balance while being less expensive and more reliable than sending a check through the mail.

**Conclusions**

Credit card interest is a real problem for many cardholders. It is so expensive that credit card users need to take a few minutes to understand how it works. And once they do, they can take steps to pay as little as possible.

### How to Add Money to an Escrow Account

One of the reasons credit-card debt can be problematic is the high interest costs it comes with compared to other types of debt. If you have credit-card debt, it’s smart and responsible to keep an eye on your payment and interest paid each month. One of the best ways to calculate your payment and interest is by bookmarking an online calculator.

## Step 1

Use the credit-card calculator provided by CSGNetwork (see Resources) to calculate credit-card payment and interest. Enter the basic details of your loan, including the current balance, rate and payment percentage (varies — ask your credit-card company) under the “Required Data Entry” section at the top. When you click the “Calculate” button the tool displays the minimum payment and total amount of interest you’ll pay to eliminate the debt.

## Step 2

Downlaod the Vertex42 Credit Card Payment Calculator to your computer. You need Microsoft Excel for this tool. The download displays a spreadsheet that opens in Excel. Enter the various terms of your credit-card account at the top to display the payments and interest paid each month. The tool also shows how long it will be until you pay off the card and a running balance for the account.

## Step 3

Use the credit card calculator at the What’s the Cost website to determine the payment and interest. After you enter your account information, the corresponding amortization table displays at the bottom of the screen with a breakdown of the interest paid and minimum payment each month, as well as the time it takes to clear the debt. You can also enter any figure you’d like to see what would happen if you make an extra payment each month.

## More Articles

How do I Calculate a Payoff Debt Reduction? →

Is Paying Several Times on a Credit Card Better Than One Payment? →

How Do I Calculate Mortgage Payment, Interest and Principal? →

How to Calculate **Credit Card Payments** in **Excel**. Microsoft **Excel** is a comprehensive **spreadsheet** and financial analysis tool and can be used in business and in personal finances. Among other budgeting tools, **Excel** also features functions. 2, TT18: **Credit Card** Repayment Calculator: Months to **Pay** Off Loan. 3, 6-Nov-07. 4, Personal Finance: Another Perspective. 5. 6, Purpose: 7, The purpose of this **spreadsheet** is to give an **Excel template** for calculating. 8, how quickly you can **pay** off debts if you made additional **payments** on a specific. 9, period basis. Description. This **credit card** minimum **payment** calculator is a simple **Excel** **spreadsheet** that calculates your minimum **payment**, total interest, and time to **pay** off. It also creates a **payment** schedule and graphs your **payment** and balance over time. You can now add extra **payments** into the **Payment** schedule to see how . This **credit card pay** off calculator for **excel** is pretty simple **spreadsheet** that can solve for a minimum monthly **payments**, for a time to **pay** off, for total interest as a sum of both interest on cash balance and balance on card purchases. This all will help in getting the answer to the question of how long it takes to **pay** off your . Aug 26, 2008 **.** Do you have so many **credit cards** that you could sew a pair of pants from them? Confused as how to get rid of them? Try this handy **Excel spreadsheet** to generate a custom strategy for becoming debt-free. Just enter your **credit cards**, their balance, and interest rate. Then enter your required minimum . **Credit Card** Payoff Calculator. Easily see what it will take to **pay** off your **credit** **card** at different interest rates and **payment** amounts with this **credit card** payoff calculator. **Excel**. Download Edit in Browser. Share. **Credit Card** Payoff Calculator . Technically, these are **spreadsheet templates** that can be used with Microsoft **Excel**, OpenOffice Calc or Google docs. **Templates** are. Need help repairing your credit? Download the Debt Reduction Calculator вЂ” Credit Repair Edition to first **pay** down each **credit card** to specific levels determined by your FICO score. Download a free **Credit Card** Payoff calculator for Microsoft **Excel**, OpenOffice, or Google Sheets that will calculate the **payment** required to **pay** off your **credit card** debt in a specified number of years, or calculate how long it will take to **pay** off your card given a specific monthly **payment**. This is a great **spreadsheet** to have in .

**Garibaldi Lake, British Columbia**

**Why track credit card accounts?**

Tracking and recording credit card account transactions in a register is just as important to keeping a checkbook and making sure you record all your bank checking account transactions in a checkbook register. Many people use credit cards for making purchases instead of making the purchase out of a checking account because off the credit card rewards they may receive or other credit card perks offered for making credit card purchases.

**How to add / delete a credit card account?**

In the “Accounts Summary” worksheet, use the “A/E” buttons to add, edit, or delete an Account Name and Account Type. For Account Type use Liability since the credit card balance is something that you owe. For Account Name, you can use a descriptive name, but be careful not to reveal full account numbers.

If you want to delete an account and all the transactions in the register of that account, first delete all the transactions in the corresponding register by selecting all the transactions in that register and then press the Delete key on the keyboard or by using the Clear Contents command. Then go to the “Accounts Summary” sheet and click the appropriate “A/E” button and clear the Account Name and Account Type fields and press OK.

**How to enter credit card purchases and credit card payments**

- For “Georges Budget for Excel”: The New Transaction button at the top of a Register will take you to the location to start entering a new transaction unless there are error(s) noted in the Balance column or all 4000 rows have been used in the Register. Clicking the New Transaction button will first remove any applied Filters in the Register and then go to new transaction.
- For “Georges Excel Checkbook Register” and “Georges Excel Checkbook for Mac”: The New Transaction button at the top of a Register will take you to the location to start entering a new transaction unless there are error(s) noted in the Balance column or all 1500 rows have been used in the Register. Clicking the New Transaction button will first remove any applied Filters in the Register and then go to new transaction.
- For “Georges Budget for Excel”, in the register of a credit card account, you can create a separate transaction for each credit card purchase and categorize each credit card purchase into an appropriate expense category (or categories if splitting the transaction), so that the credit card purchases will be reflected in the income and expense reports and charts. Since you are going to categorized each credit card purchase into an expense category in the register for the credit card account, the credit card payment is recorded in the registers and categorized as a “Credit Card Payment” that is listed under “Other Categories” in the Category List & Budget worksheet. The “Other Categories” listed in the Category List & Budget worksheet do not impact the income and expense reports and charts. You have to record the credit card payment in both the checking account register that you paid the credit card from and the credit card account register that you made the payment to.

- For “Georges Excel Checkbook Register” and “Georges Excel Checkbook for Mac”, you can follow the same process as for “Georges Budget for Excel” if you use the optional category field. There is no centralized “Category List & Budget” worksheet, since those Excel templates are just simple checkbook registers and not personal budgeting software with actual vs budget reporting, but you can use the filters in the registers to filter the transactions by the different register columns and get a subtotal of the filtered items, thus creating a simple report right in the registers. Also you can only split transactions in “Georges Budget for Excel”

**Enter credit card transaction amounts as positive or negative?**

Transaction amounts are entered in the Amount column in the Excel Credit Card Registers.

- Enter credit card purchases, credit card charges, credit card fees, and interest expense as negative amounts in the Excel credit card account register.
- Enter credit card payments as positive amounts in the Excel credit card account register. (Note: if you paid your credit card with funds from your checking account, you would also have to record the credit card payment in the Excel checking account register and enter the amount as a negative amount in the Excel checking account register since the credit card payment is decreasing your checking account balance)

Credit Card Payoff Calculator is an excel template that helps you calculate the number of installments to pay off your credit card outstanding amount.

In addition to the above, it also calculates payments based on two types of payment modes. One is minimum balance payment and the other is the proposed payment.

Furthermore, it calculates the difference of interest that you will pay in each mode.

Lastly, it also consists of Credit Card Payment Log for a whole year that you can use to manage details of payments and other relevant details.

## How to Easily Pay Your Credit Card Debt?

Follow these simple and easy tactics to avoid or pay off your credit card debt:

- Use a credit card when necessary.
- Plan your spendings. Spend on Credit Card that you can pay off in full.
- Only use credit cards that have the least interest rates.
- Spend on things that are necessary and not what you want.
- For multiple cards, make minimum payments regularly.
- Make a payment plan and stick to it.
- Plan your spends so as to pay off your outstandings.
- Use the Avalanche Method or the Snowball method that is convenient for you to pay off the amount.
- Use the Balance Transfer Card to save on interest.

Read the below guide to managing your credit card efficiently

## Credit Card Payoff Calculator Excel Template

We have created a simple and easy Credit Card Payoff Calculator Excel Template that helps you calculate the duration of payoff and also the interest amount to be paid against each payment mode.

## Contents of Credit Card Payoff Calculator Excel Template

This template consists of 2 sheets:

- Credit Card Payoff Calculator.
- CC Payment Log.

### Credit Card Payoff Calculator

This template consists helps you calculate months to pay off your debt based on the mode you choose for payment.

Ideally, there are 3 ways to make payments:

- By paying the minimum amount.
- By paying a proposed amount above the minimum.
- Full Payment.

Paying the minimum amount will give elongate the tenure and interest payments will be higher.

Whereas paying a proposed amount higher than the minimum will decrease the interest and also the tenure.

You need to enter the following details:

Credit Crat Amount

Interest Rate Per Annum

Monthly Minimum Percentage

Proposed Monthly Payment

**Important Note:** The proposed monthly payment should always be higher than the minimum amount.

When you enter the above figures, the template automatically calculates the following:

Interest Rate Per Month

Monthly Minimum Payments

Months To Payoff – Minimum Payment

Months To Payoff – Proposed Payment

Total Interest – Minimum Payment

Total Interest – Proposed Payment

Additionally, the template displays the above data in graphical format.

**Payoff Months Graph**

**Interest Payable Graph**

### CC Payment Log

The credit card payment log manages the data of payment, usage, and interest for a whole year.

Initially, you need to enter the Per annum interest rates, monthly interest rates, Minimum payable percentage, total card limit and interest on cash advances.

Furthermore, it consists of the following column heads:

**CC Balance:** Enter the amount against the month you want to start for. You need to enter only the first one. Rest it will carry forward according to the usage and interest calculations.

**Minimum Due:** This field is auto-populated according to the percentage we insert in the top row.

**Due Date:** Date on which the payment is due.

**Payments:** Actual payments made.

**Interest on the remaining Amount:** The template auto-populates this field.

**Late Fees/Fines:** Enter fines and late fees if any.

**Current Usage:** Usage of the current month of the credit card.

**Cash Advance:** Insert amount if withdrawn any cash advances.

**Interest on Cash Advances:** Interest on cash advances is auto calculated according to the percentage provided.

**Balance Amount:** This field is auto-calculated. It is the sum of all the amounts used and pending from the payments.

**Balance = Outstanding – Payments + Interest on Remaining + Late Fees/Fines + Current Usage + Cash Advances + Interest on Cash Adv.**

In the end, it also displays the graphical chart of your payments and your payable credit card balances.

This template can be helpful to individuals, companies, credit managers and other relevant professionals.

We thank our readers for liking, sharing and following us on different social media platforms.

If you have any queries please share in the comment section below. We will be more than happy to assist you.

#### About Fahim Lashkaria

I love working in Excel and I share functional excel templates at ExcelDataPro. Read more about me here or interact with me on twitter.

## You’re a wiser consumer if you go behind the numbers

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Many people want to understand how their credit card payments are calculated. Knowing the specifics can help you make smart decisions and manage your debt. Good debt management starts with understanding how the payment is calculated and how each payment goes toward reducing your debt (or not).

Online credit card calculators provide some helpful numbers. But if they only show you a final dollar amount or “time to pay off the note” figure. You don’t learn where those numbers come from or their calculations. Perhaps you’re considering putting a major purchase on your credit card or strategizing a debt payoff plan. Either way, you’re a wiser consumer if you go behind the numbers.

Fortunately, the process of calculating your payments (and costs) by hand is not too difficult. If you can remember how to multiply—or get a calculator to do it for you—you’ll have everything you need.

## The Minimum Payment

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Start by figuring out the minimum payment required by your credit card company. That number is typically based on your balance.

*Example:* Your card issuer requires you to pay 3% of your outstanding loan balance. You owe $7,000 on your credit card. The minimum payment is 3% of $7,000, or $210. To find that answer, multiply $7,000 by .03 (which is the same as 3%—learn more about converting percentages and decimals).

Your card issuer determines your minimum payment, so you may need to ask which number to use. Learn how to find your minimum payment and understand common methods of calculation.

## First, the Interest

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When you make a payment, your loan balance doesn’t always decrease by the amount you pay. Your balance probably won’t go down by $100 if you make a $100 payment—unless you have a 0% interest loan and no other fees or charges. Each payment you make also goes toward the credit card company’s cut of the interest rate and other loan fees.

To figure out how much goes toward interest, you need another calculation. It is a fairly easy calculation—but there are a few steps involved.

- Find the interest rate that you pay on your card—12% APR, for example.
- Convert that annual rate to a monthly rate by dividing by 12—because there are 12 months in a year—so, in this example, you’d pay 1% per month.
- Multiply the monthly rate by your outstanding balance. As an example, use 1% times a balance of $7,000.
- The answer is how much you’re paying in loan interest—$70 in this example—each month.

The steps above illustrate a simplified monthly interest calculation. However, your card issuer might charge interest daily. If that’s the case, the calculation takes more work, but follows a similar process:

- In Step 2, convert to a daily rate by dividing the annual rate by 365 (it’s 0.0329%)
- Calculate the daily interest charge ($2.30 in this case)
- Add that charge to your account balance, for a new total of $7,002.30 after the first day
- Repeat the process for each day of the month

## Then the Principal

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After you pay interest, the remainder of your payment goes toward your debt—known as the “principal” part of your loan or the loan balance. Subtract the interest charges from your total payment to figure out how much principal you pay off in any given month.

In our example, your payment is $210, and the interest charges amount to $70. Subtract 210 – 70 = 140, so you pay off $140 of your loan this month. That brings your loan balance down to $6,860 for next month.

As you might have guessed, you need that number to calculate the next month’s payment. If you do this all by hand, the process is time-consuming, but calculators and spreadsheets can speed the process.

If you pay more than the minimum payment, which is typically a smart move, you pay down your loan balance faster.

The amount that goes toward interest this month is fixed—there’s nothing you can do about it at this point. But you can accelerate your debt repayment and pay less interest next month by paying more than the minimum.

## Many Months, Many Calculations

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You know how to calculate the payment and interest charges for a single month, but how can you calculate over longer periods?

It’s easiest to use a spreadsheet or a hand-built table to see the entire process of paying off your debt. The idea is the same as making an amortization table for a home or auto loan: Each row represents one payment.

It may take a small amount of spreadsheet wizardry, but you can take it slow or start with a template, and you’ll have a valuable tool. With each new row, look back at the loan balance at the end of the previous month (in the row above it). For a sample of how your spreadsheet might look, copy the images in this tutorial.

## Variations on the Theme

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mapodile / Getty Images

Now you have a basic understanding of how most credit card payments work. But every card issuer is different, and your card might have different features. With what you’ve already learned, you should be able to figure out how to calculate your own debt payoff with just about any card issuer.

- If your card has an annual fee, add that fee to your
*loan balance*when the fee is charged. - If your interest rate will change in the future, keep that in mind as you run the numbers and adjust the calculation.
- If you decide to skip a payment (which you probably shouldn’t do) for the holidays, make that month’s payment a zero.

The start of a new year is a time for planning, renewal, and figuring out how to pay off that holiday debt. This article considers how to model debt repayment calculations from a practical perspective. It addresses three common calculations using Excel’s financial functions for the last item.

For completeness, my examples include the seemingly more convoluted mathematical formulas that arrive at the same answer. This is because some of the useful functions (eg*,* **CUMPRINC**) are not in the “basic” Excel function directory for some versions of Excel. The mathematical alternatives work without relying upon this add-in using no more than the standard operators plus the **LOG** function on occasion.

For simplicity, the discussion below focuses on scenarios where payments are made at the end of each period (ie, payments are “in arrears”). All of the following examples are considered further (including when payments are made “in advance”) in the attached Excel file.

Problem 1: Minimum payment calculations (PAiN relief)

This is often referred to as the *mortgage calculator*. Here, the aim is to calculate what the regular repayment is per period to service and pay off a debt over a given amount of time.

For example, if I borrow $300,000 over 25 years at an interest rate of 6% per annum, what will my regular monthly payments be (assuming no change of rate)?

The answer is given by the formula:

**P = Ai / (1 – (1 + i) -N )** where:

**P**= regular periodic payment**A**= amount borrowed**i**= periodic interest rate**N**= total number of repayment periods

(It’s interesting that the acronym for remembering the mortgage variables is PAiN!)

In our example, crunching the numbers (using a periodic interest rate of 0.50%, which is 6% ÷ 12 months, and total number of periods being 25 × 12 = 300) gives a monthly repayment of $1,932.90.

The same calculation could have been performed in seconds using Excel’s built-in **PMT** function:

**PMT (rate,number_of_periods,amount_of_loan)**

It should be noted that using **PMT** will give the same solution but be negative instead. This is because Excel’s financial functions distinguish between cash inflows (positive) and outflows (negative).

Problem 2: Calculating the outstanding balance

If we want to refinance or pay off a loan, we need to be able to forecast the balance outstanding at a point of time (ignoring penalties, etc.).

Continuing the example from above, I have borrowed $300,000 over 25 years at an interest rate of 6% and am making monthly (minimum) repayments. After three years, I am able to refinance my loan without incurring any penalties. What would be the outstanding amount at this point in time?

The answer to this question is given by the formula:

**B = A(1 + i) n – (P((1 + i) n – 1) / i)** where:

**B**= balance outstanding**P**= regular periodic payment**A**= amount borrowed**i**= periodic interest rate**n**= number of periods payments that have been made (**n**

Problem 3: How long before the debt is paid off?

What if we decide to turn the problem around? Instead of determining the amount outstanding, how do we calculate how long a debt will take to pay off if we decide to stipulate what the regular payment will be each month instead?

Returning to my example, if I borrow $300,000 at an interest rate of 6%, how long will it take to pay off if I pay $5,000 each month? This assumes that our payment exceeds the accrued interest each month (here, $300,000 × 0.50% = $1,500).

The answer is given by the formula:

**N = -log(1 – (Ai / P)) / log (1 + i)** where:

**N**= total number of repayment periods**A**= amount borrowed**i**= periodic interest rate**P**= regular periodic payment

(The logarithmic base is irrelevant as long as the same one is used for the numerator and denominator of the above quotient.)

Plugging the inputs into the formula gives us a value of 71.51, ie, 72 periods (fractions of periods do not really make sense here).

The same calculation could have been computed simply using the **NPER** function:

**NPER(rate,-payment,amount_of_loan)**

Note that the payment must be negative, and the amount of the loan must be positive.

Word to the wise

There are several other functions that can answer questions posed by modifying our scenarios above. Common functions include **PPMT** (amount of principal paid in a given period of time), **IPMT** (amount of interest paid in a given period of time [note **PPMT** + **IPMT** = **PMT** for any one period]), and **RATE** (the implied interest rate for an annuity). However, with the exception of **RATE** (where **Goal Seek** is often used instead), these other functions can often be circumvented using extensions of ideas illustrated in the examples above.

As with many things in Excel, there is more than one approach to the correct answer.

If you pay attention to your credit card billing statement each month, you’ve probably noticed that your minimum payment—the amount you must pay to avoid being penalized—can change from one month to the next. That’s because it’s typically calculated as a percentage of your outstanding balance plus any fees. So the higher your balance, the higher your minimum payment will be.

While it’s always best to pay more than the minimum required, you should understand how the minimum is calculated and what happens if you don’t pay it. Credit card issuers use different methods, but there are some general principles that apply. Here’s what you need to know:

Aim to pay your monthly balance in full to avoid interest charges. If you can’t, paying more than your minimum will help you mitigate the effect of compound interest.

## Methods of Calculating

### Method 1: Percent of the Balance + Finance Charge

Some issuers calculate the minimum payment as a percentage of the balance at the end of the billing cycle, plus a monthly finance charge. So, for example, 1% of your balance plus the interest that has accrued. Let’s say your balance is $1,000 and your annual percentage rate (APR) is 24%. Your minimum payment would be 1%—$10—plus your monthly finance charge—$20—for a total minimum payment of $30.

### Method 2: Percent of the Balance

Some credit card issuers calculate the minimum payment as a straight percentage of the balance at the end of your billing cycle. This percentage is likely to be higher than in the above scenario, maybe between 2% and 5%, and it will be applied toward both your principal and interest charges. So again, if you had a $1,000 balance and your minimum payment was calculated at 2% of that balance, it would be $20.

### Other Variations

Some issuers use both of these methods, determining the amount based on the higher of the two. And in many cases, any of these methods can be combined with a floor amount. If the calculation the issuer uses yields an amount less than say, $25 or $35, the floor kicks in instead.

Penalty fees like late fees, as well as past due amounts, will typically be added into the calculation. This would increase your minimum payment significantly.

One other caveat: If you’ve exceeded your credit limit, your issuer may add that to your minimum payment. For example, if your balance is $1,050 and your credit limit is $1,000, your minimum payment may be 2% of the balance—$21— plus the $50 from being over the limit, for a total of $71.

## How to Find Out How Yours Is Calculated

You can find out which method your credit card issuer uses by reading your credit card agreement. Look for a section titled “How your minimum payment is calculated” or “Making payments.” A customer service representative can also help you.

**When Your Minimum Payment May Be Your Full Balance**

There are some instances when your issuer may require you to pay your balance in full:

- If your account is charged off, you’ll no longer have the luxury of making monthly payments and your credit card issuer will demand the full balance.
- If you have a charge card, your minimum payment is the full balance on the credit card. By nature, charge cards don’t allow you to carry a credit card balance from month to month, so you’re not allowed to pay just a portion of the balance each month.
- If your balance is below a certain amount, like $25, your minimum payment may be the full balance.

## Reasons Your Minimum Payment May Increase

Besides an increase in your balance, there are a few other reasons your minimum payment could increase from one month to the next:

- You were late on a previous payment.
- You’re over your credit limit.
- Your interest rate, or APR, has increased.
- The credit card issuer changed the percentage used in the calculation, either as a company principle or because you pose a bigger credit risk.

## Making Your Minimum Payment

The minimum payment must be paid by the cutoff time on the payment due date. For most credit cards, the cutoff time for your minimum payment is 5 p.m.3 Some credit card issuers extend the cutoff time to later in the day. Check with your credit card issuer to find the exact time. Make sure you give yourself enough time to get it in on time.

Your credit card issuer will give you a few options for making your minimum payment by mail, online, or other the phone.

- If you mail your payment, you can send a check or money order.
- If you make a payment online or over the phone, you’ll be able to supply your checking account and routing number to make an electronic payment.

You can’t use another credit card to make your minimum payment.

## What Happens If You Miss Your Minimum Payment

If you miss your monthly minimum payment or you pay less than the minimum, your credit card issuer can charge you a late fee. Missing the minimum payment can also mean you forfeit any promotional interest rate you have on your balance. After you miss two minimum payments in a row, your credit card issuer may raise your interest rate to the penalty rate.

After your minimum payment is more than 30 days late, the credit card issuer will report the late payment to the credit bureaus. This late payment will go on your credit report and remain for seven years. Your credit score might also be impacted, especially in the first few months after the late payment is added.

Previously missed payments will raise the current minimum payment due. Not only will you be required to make the current and missed minimum payments, but a late fee will also be added to the amount you need to pay to get your account back in good standing. Because the minimum payment rises with each missed payment, it gets harder and harder to catch up on your payments.

### Paying More Than the Minimum

You can and should pay more than the minimum, if at all possible. Paying only the minimum is the most expensive way to pay off your credit card balance. It takes the longest amount of time, and you’ll pay more interest by the time you completely repay your balance. In fact, if you’re making the minimum payment yet continuing to make purchases each month, your balance will grow instead of shrink. This is one of the fastest ways to get yourself into debt.

This calculator creates the most cost-efficient payback schedule for multiple credit cards using the Debt Avalanche method. To evaluate the repayment of a single credit card only, or for further information about credit cards and how they work, please visit our credit card calculator.

### Why Have More Than One Credit Card?

Given a qualifying credit score, it is fairly common for people to have more than one credit card; in the U.S., Americans average more than 2 cards per person. There can be many reasons why it can be beneficial to have more than one, and some are listed below:

**Multiple Perks**—The main benefit of carrying multiple credit cards is that there are many different types with different benefits. Rewards credit cards that provide their users with different rewards like airline mileage, hotel bookings, or retail discounts based on spending. Balance-transfer credit cards that temporarily allow the incurrence of debt without interest, or business credit cards that help separate personal expenses from business ones for tax reasons, and much more.**More Available Credit**—Another useful advantage is that there is more available credit for the cardholder to use. While a single credit card with a credit limit of $5,000 only allows the cardholder to charge up to $5000 at a time, having two cards each with a credit limit of $5,000 will allow the cardholder to charge up to a maximum of $10,000 at a time.**As Backup**—It can help to have a backup card in some cases when one credit card is not accepted at a specific merchant, or is lost or stolen.**Diversify Spending**—The higher the purchase volume on any one credit card, the greater the financial consequences of having the card hacked. Diversified spending across multiple cards can reduce the damage in case of fraud.**Increase Credit Score**—Believe it or not, having many credit cards can actually boost a person’s credit scores. Credit bureaus use a measure called credit utilization ratio (CUR), which is a number of how much is owed on all revolving accounts divided by total available credit. For example, if a person has one credit card with a credit limit of $4,000 and another with $6,000, and spends a total of $3,000 on them in a month, their CUR for that month is 30%. Low CURs affect credit scores positively.

### Drawbacks of Multiple Credit Cards

As fruitful as the benefits of having multiple credit cards can be, there are some general disadvantages to take note of.

For one, it is quite common for people to mismanage their credit card usage in some way, and the biggest culprit is overspending. Statistics have shown that credit card debt is mostly due to spending more than what is affordable on unnecessary purchases, emergency services (medical and non-medical), necessities not covered by income, and necessities during unemployment. Unnecessary purchases are the largest contributor of credit card debt in the U.S.

Unfortunately, credit cards are a form of unsecured loan with relatively high interest rates with late payment fees, and the penalties become steeper if timely payments are not made consistently. More credit cards will mean more to manage including separate monthly payments, different due dates, etc.

For more information about or to do calculations involving budgets, please visit the Budget Calculator.

### Debt Avalanche Method

There are multiple ways to approach paying off credit card debts each month. The Credit Cards Payoff Calculator uses a method known as the “Debt Avalanche method.” The calculator also assumes that no further transactions are made on any of the credit cards, minimum payments stay the same, and interest rates are static. Credit card issuers are required to give 45 days’ notice to anyone they selectively raise the interest rates on, and they can only do so after the first year.

The debt avalanche method prioritizes the minimum monthly due on all credit cards. The “Monthly Budget Set Aside for Credit Cards” will be spent on these first. After the minimum monthly dues have been paid, any remaining funds will go to the highest interest credit card, followed by the next highest, until there are no more funds, or all of the cards have been paid off.

### Debt Snowball Method

While the calculator uses the Debt Avalanche method, the Debt Snowball method is an alternative for people who cannot find success using the former. This credit card payoff strategy focuses on psychological factors like motivation and incentive to keep people on track towards paying off their credit card debt. The two methods are similar in that the first priority is always to meet the minimum payments due for each credit card in order to avoid the hefty fees. After this, the Debt Snowball strategy is quite simple: pay off the credit card with the smallest balance, regardless of interest rate.

Although this strategy may be less efficient in that it prioritizes motivational and psychological factors for paying off debt, rather than minimizing the amount of money spent to pay off said debt, it can be a more effective method for paying off debt for certain people. Psychologically, people are more likely to adhere to something when tangible progress is visible, whether it’s the elimination of debt, shedding a certain number of pounds, getting a certain grade, or any other task. In the end, a person should choose a method that is most likely to enable them to reduce and eventually eliminate their debt, rather than increase it.