The first step on the road to effectively managing your credit card debt is understanding it.

We look at our credit card statements, see our current balance and annual percentage rate, but we don’t always know how long it will take to pay off our credit card debt, or the true cost of paying off that debt.

This is why we’ve provided you with not one, but two free calculators that can let you see the big picture.

Debt Management Plan Payoff Calculator

First, we have our Debt Management Plan Payoff Calculator. This allows you to get a sense of what you could owe based on two numbers—your current balance and your annual percentage rate.

The average American household has:

• $15,000 in credit card debt
• an 18% annual percentage rate

When we enter these values into the calculator, we get a monthly minimum payment of $375.

Assuming that you pay $375 a month going forward, you’ll be able to pay off your credit card debt in 62 months, or just over five years.

During that time, you’ll pay $8,079 in interest. That’s $130 a month in interest alone.

Keep in mind, that number doesn’t include the additional fees your credit card company can charge over time.

Now let’s look at the right-hand column. That shows the same level of debt with a Debt Management Plan.

As you can see, you’ll be paying for roughly the same amount of time. The difference is, you’ll be paying almost $100 less per month, and because of the lower interest rate, you’ll only pay $1,778 in interest. That’s a savings of $6,300 in interest over those five years.

Credit Card Payoff Calculator

Of course, not everyone wants to just pay the minimum. Some people want to pay more every month.

To show you the benefits of paying more each month, and how that can compare with a Debt Management Plan, we’ve created our Credit Card Payoff Calculator.

Let’s say that instead of paying $375 a month, you decide to add an extra $25 a month and pay $400. A small difference, for sure, but over time, one that can be significant.

Let’s run the numbers through the calculator.

As you can see, your total interest payments drop to $7,210 and the number of months required to pay off your credit card drops to 56. That $25 a month quickly adds up to over $800 in savings.

Let’s look at the numbers with a Debt Management Plan. Because you’ve indicated that you can pay more per month, the calculator has determined that you may be able to take advantage of a Debt Management Plan that pays off your debt in four years instead of five.

With the Debt Management Plan, your interest rate goes down to 4.5% with a monthly payment of $342 a month. This is still less than the $375 you were paying before.

When you pay down your debt over four years, your interest is only $1,418, and you still save $5,792 in interest.

These calculators are designed as tools to help you reach your debt management goals. But no calculator is perfect, and everyone’s situation is different. If you’d like to learn more about managing your debt, working with a Certified Credit Counselor is the best place to start.

Schedule an appointment today or call us at (800) 920-2262.