Q:

How do you use a credit card payoff calculator?

A:

Quick Answer

Using a credit card calculator, such as that featured on the Bankrate website, enter your credit card balance and interest rate, along with either your monthly payment or the number of months after which you wish to be debt free. The calculator tells you how long it takes to pay off the card with your current monthly payments or how much you have to pay per month in order to be debt free in the desired length of time.

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Full Answer

To pay down credit card debt, one common method is to begin by paying off the card with the highest interest rate, advises U.S. News and World Report. This means paying the minimum balance on other cards and funneling those savings into a larger monthly payment on the most expensive card. A drawback to this is that it takes quite a while to pay off credit cards this way, which can become discouraging to people in a lot of debt.

Another method is to begin with the credit card that has the smallest balance. This has the benefit of seeing results quickly as card balances disappear, but may result in paying more interest over the long run, warns U.S. News and World Report. A third method is to take the entire amount you are able to pay each month and split it equally between each card. This approach is simpler than the others but also slower. With this method, it is important to remain aware of finance charges or other fees that can make these payments less effective in bringing down the balance.

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