As inflation continues biting American consumers, news headlines involving their personal finances have become more dire.
Here's an example that recently grabbed our attention:
Analysts at the Federal Reserve Bank of New York report that result is heavily weighted toward younger Americans. They indicate around one out of six members of Generation Z face those financial straits, compared with one out of twenty members of the Baby Boom generation.
Regardless of generation, it might be very helpful to know how long it would take you to pay off your credit card debt. That question can be answered with the personal finance formula known as the "Credit Card Equation, which we've built the following tool to do. Just enter the details of any credit card debt scenario you want to consider and it'll tell you how long it will take to pay off that debt, assuming no additional debt is charged up on that credit card. [If you're accessing this tool on a site that republishes our RSS news feed, please click through to our site to access a working version.]
If you're wondering about the default values in the tool, they are the figures we pulled from the following sources that were available as of 24 May 2024:
- Bankrate Current Average Credit Card Interest Rate (Annual Percentage Rate)
- Credit Karma's State of Debt and Credit Report, January-March 2024. This report indicates the average credit card balance of 82.9 million Credit Karma members and the average size of their next planned payment.
Again with the assumption that no additional debt is charged to this "average" American credit card, the tool finds it will take 58 months to fully pay it down to a zero balance. Playing with the tool, we found that increasing the monthly payment by $20 can take eight months off that payoff period. Reducing the monthly payment to $180 however will extend the payoff time to 70 months.
Don't let us have all the fun! Go ahead and take it for your own test drive to work out whatever range of credit card payoff scenarios you want to consider.
Image credit: Woman with many credit cards by Petr Kratochvil on PublicDomainPictures.net. Creative Commons CC0 1.0 DEED CC0 1.0 Universal.