Credit Card Payoff Formula Explained, With Examples
Every credit card payoff result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
n = −ln(1 − r·B/P) ÷ ln(1 + r).
What each input means
- Balance (S$): the value you enter in the calculator.
- Interest rate (% a year): the value you enter in the calculator.
- Monthly payment (S$): the value you enter in the calculator.
Example
For example, with these inputs:
- Balance (S$): 5,000
- Interest rate (% a year): 27.8
- Monthly payment (S$): 300
the calculator returns:
- Months to pay off: 22 months
- Approx. total paid: S$6,600.00
How the result changes
The table keeps the other inputs at their example values and changes balance (s$).
| Balance (S$) | Months to pay off | Approx. total paid |
|---|---|---|
| 5,000 | 22 months | S$6,600.00 |
| 2,500 | 10 months | S$3,000.00 |
| 3,750 | 15 months | S$4,500.00 |
| 6,250 | 29 months | S$8,700.00 |
| 7,500 | 38 months | S$11,400.00 |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
Calculators make it easy to compare scenarios side by side: a shorter tenure versus a lower instalment, a higher deposit versus more cash in hand, or paying down debt versus investing. Seeing the total cost, not just the monthly figure, usually makes the better choice obvious.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Compounding is the reason long-term saving works: returns earn further returns, so the growth curve steepens over time. The same maths works against you with debt, which is why credit card balances at around 27% a year grow quickly if only minimum payments are made.
Related calculations
- Present Value Calculator: Finds what a future sum is worth today.
- CAGR Calculator: Calculates the compound annual growth rate between two values.
- ROI Calculator: Measures the return on an investment as a percentage.
- Inflation Calculator: Shows how inflation changes prices and purchasing power.
Use the Credit Card Payoff Calculator to plug in your own numbers.
Run your own numbers: Credit Card Payoff Calculator