Revolving Credit Calculator
Simulate credit card payoff scenarios. Visualize the interest trap of minimum payments vs. fixed payments with amortization data.
Minimum Payment Strategy
Fixed Payment Strategy
About
Revolving credit, such as credit cards or HELOCs, utilizes compound interest that is often calculated daily. This creates a potential "debt trap" where minimum payments barely cover the interest accrued, leaving the principal balance stagnant. Consumers often underestimate the time and cost required to clear these balances.
This tool simulates the mathematical reality of revolving debt. It iterates through daily periodic rates and monthly cycles to project the "Payoff Date" and "Total Interest Paid". Crucially, it contrasts the default "Minimum Payment" strategy against a "Fixed Payment" strategy, highlighting the exponential savings achieved by marginally increasing the monthly contribution.
Formulas
Credit cards typically use the Daily Periodic Rate (DPR) to calculate interest.
The monthly finance charge is approximated by summing daily accruals or multiplying the average daily balance:
The principal reduction is:
Reference Data
| APR Rate | Daily Rate (DPR) | Interest per $1,000 / Month | Payoff Difficulty |
|---|---|---|---|
| 0% (Promo) | 0.0000% | $0.00 | Trivial |
| 12% (Low) | 0.0328% | $10.00 | Manageable |
| 19% (Avg) | 0.0520% | $15.83 | Moderate |
| 24% (High) | 0.0657% | $20.00 | Difficult |
| 29.99% (Penalty) | 0.0821% | $25.00 | Severe |