Credit Card Payoff Calculator

Minimum Payment = 5% of outstanding OR ₹100 (whichever higher). At 42% APR (3.5%/month), ₹1L debt with ₹5k minimum payment takes 30+ months (2.5 years) with ₹35k total interest paid. If you pay only minimum (which decreases monthly), it stretches to 10-15 years! Example: ₹2L debt, 42% APR, ₹10k minimum → 47 months, ₹95k interest. Same debt, ₹15k fixed payment → 16 months, ₹28k interest (saves ₹67k, finishes 31 months earlier). TRAP: Minimum payment designed to maximize bank profit, minimize your payoff speed. NEVER pay only minimum unless absolutely broke.

Avalanche Method: Pay off highest interest rate card first (mathematically optimal). Example: Card A ₹1L at 42%, Card B ₹50k at 24%. Pay minimum on B, extra on A. Saves more interest. Snowball Method: Pay off smallest balance first (psychological wins). Example: Card A ₹1L, Card B ₹50k. Pay off B first (faster win), then attack A. Motivation boost. Real Example: 3 cards → ₹2L (42%), ₹1L (36%), ₹50k (24%). Avalanche: Pay ₹2L first, save ₹40k interest. Snowball: Pay ₹50k first, feel progress, save ₹35k. Verdict: Avalanche IF disciplined. Snowball IF need motivation (small wins keep you going). Difference usually under 10% interest saved.

YES, if personal loan interest lower than credit card APR. Credit card: 36-42% APR. Personal loan: 10-18% APR. Example: ₹2L credit card debt at 42% → ₹95k interest in 2 years. Personal loan ₹2L at 14% for 2 years → ₹29k interest. SAVES ₹66k + simplifies to single EMI. CRITICAL: (1) Ensure you CAN get approved (CIBIL 700+ required), (2) Don't use credit card again after transfer (most people fail here → spiral deeper into debt), (3) Calculate processing fees (1-3% of loan amount). Best option: Balance transfer to 0% APR card for 6-12 months (pay ₹3-5k fee, save ₹50k interest). Worst option: Continue paying minimum on 42% card (debt slavery for decade).

Example: ₹3L debt at 42% APR. Minimum payment only (₹15k initial) → 60 months, ₹2.1L interest. Minimum + ₹5k extra (₹20k total) → 18 months, ₹54k interest. SAVES: ₹1.56L interest + finishes 42 months earlier. ROI on extra ₹5k/month: 1560% (best investment you'll ever make). Even ₹2k extra monthly makes massive difference: ₹17k payment → 24 months, ₹85k interest (saves ₹1.25L vs minimum). The math: Every ₹1000 extra monthly on ₹3L debt saves ₹25-30k interest and cuts 6-8 months off payoff time. PRIORITY: Pay credit card before ANY other goal (42% guaranteed return > any investment).

Balance Transfer = Move debt from high-interest card to 0% APR promotional card. Typical offer: 0% APR for 6-12 months, 2-3% transfer fee. Example: ₹2L debt at 42% → ₹7k interest/month. Transfer to 0% card with ₹4k fee (2%) → Save ₹7k × 12 months = ₹84k, pay ₹4k fee → Net savings ₹80k. CATCH: (1) Fee (2-3%), (2) 0% period only 6-12 months (must pay off FAST), (3) After promo, reverts to 36-42% APR. Banks offering: SBI Card (6 months 0%), HDFC (9 months), ICICI (12 months). Eligibility: CIBIL 750+, income proof, clean payment history. Verdict: HIGHLY worth it IF you aggressively pay off in promo period. Trap if you just transfer and continue minimum payments.

Credit cards charge MONTHLY interest, not annual. 42% APR = 3.5% per month (42% / 12). Compounds DAILY in most banks. Formula: Daily interest = (Outstanding × APR) / 365 × Days. Example: ₹1L outstanding, 42% APR, 30-day billing cycle → Interest = ₹1L × 0.035 = ₹3,500 (nearly 4% of debt MONTHLY). If you pay ₹3,500 (only interest), principal stays ₹1L forever. To reduce principal, pay greater than ₹3,500. Compounding impact: Year 1: ₹1L becomes ₹1.52L (52% effective rate due to monthly compounding, not 42%). This is why credit card debt spirals—most people pay ₹5k on ₹1L debt, thinking it's progress, but ₹3.5k goes to interest, only ₹1.5k to principal.

YES, banks settle for 50-70% of outstanding if you're severely delinquent (90+ days overdue). Process: (1) Stop paying for 3+ months (tanks CIBIL to 300-400), (2) Bank marks as NPA (Non-Performing Asset), (3) Negotiate settlement (₹2L debt → Settle for ₹1L-₹1.4L). CRITICAL DOWNSIDES: (1) CIBIL destroyed for 7 years (no loans, credit cards, high insurance premiums), (2) Settlement amount reported to CIBIL ('Settled' tag = red flag), (3) Tax liability on forgiven amount (₹60k forgiven = ₹18k tax at 30% bracket). INSTEAD: (1) Request interest waiver (if genuine hardship, medical emergency), (2) Convert to EMI plan (12-24 months, 12-18% interest vs 42% revolving), (3) Pay aggressively before default. Negotiation works ONLY if you're already defaulting. If current, pay off aggressively—negotiate tank credit score permanently.

Credit Utilization Ratio (CUR) = (Outstanding / Credit Limit) × 100. Ideal: Less than 30%. High utilization tanks CIBIL. Example: ₹1L limit, ₹90k outstanding → CUR 90% → CIBIL drops 50-100 points. Payment history (35% of score): 1 missed payment → Drop 50-80 points. 3 missed payments → Drop 150+ points. 90 days overdue → Drop 250+ → CIBIL under 500. Settlement: Permanent 'Settled' tag → CIBIL capped at 600-650 (considered high-risk). RECOVERY: Pay off debt fully → Utilization 0% → CIBIL recovers 50-100 points in 3-6 months. Maintain under 30% utilization → CIBIL 750+ in 12-18 months. Credit card debt THE biggest CIBIL killer. Missed EMI on home loan = 20-point drop. Missed credit card payment = 50-point drop (banks view unsecured debt defaults more severely).

NO, keep it OPEN (unless annual fee issue). Closing card reduces total credit limit → Increases utilization ratio on other cards → Drops CIBIL. Example: 2 cards, ₹1L limit each (₹2L total), ₹50k debt total → CUR 25% (healthy). Close 1 card → ₹1L limit, ₹50k debt → CUR 50% (unhealthy) → CIBIL drops 30-50 points. Also: Credit history length (15% of CIBIL) lost. OLD card = good history. Closing = lose that. INSTEAD: Pay off completely, keep card, use for small expenses (₹500-₹1000/month), pay FULL balance every cycle → Build excellent credit history. Zero balance credit card = perfect CIBIL booster (0% utilization, active account). CLOSE only if: (1) High annual fee (₹5k+), (2) Can't control spending addiction (cut card physically but don't close account officially until CIBIL 750+).