How Long Does it Take to Clear Debt?

Mortgage, auto and installment loans have predetermined terms, but credit cards and lines of credit can last indefinitely. If you’re interested in how long it will take to clear your credit debt, you’ll find a variety of tools to help you determine the answer. Reducing the time it takes to clear your debt requires decreasing the interest rate and/or increasing the amount you pay each month.

Online Debt Calculators

Online debt calculators can help you determine how long it will take to pay off debt (see Resources). To determine the time you'll need to clear your debt, you’ll need the interest rates on each credit card, the balance and the payment amount you make each month. Bankrate’s website allows you to modify the payment and interest rate amounts to determine the effect of debt consolidation or payment acceleration.

Microsoft Excel

Another tool to calculate the time it would take to clear debt is Microsoft’s spreadsheet program, Excel. Enter the interest rate in decimal form in cell A1. Enter your monthly payment amount in cell A2. Finally, enter the credit card balance in cell A3. Click on cell A4 and select the "NPER" function from the "Insert Function" button. In the “Rate” box, type “A1/12.” Note that you make monthly payments, so the annual rate is divided by the number of months in a year. In the “Pmt” box, type “A2.” In the “FV” box, type “A3.” Disregard the “PV” and “Type” boxes. Press "Enter." For example, if you have a $12,000 balance with a 12 percent interest rate, and make the minimum payment of $480, you’d put 0.12 in cell A1, 480 in cell A2, and 12000 in cell A3. The NPER function shows that it will take 28.912 payments to pay off the balance.

Amortization Schedules

Amortization schedules are good for understanding how much of your payment goes toward interest and how much is paying down the balance. Online debt calculators offer amortization schedules, or you can build your own in Microsoft Excel by using the "IPMT" and "PPMT" functions. For example, to determine how much of your $480 is paid for interest using the "IPMT" function, enter A1/12 for the rate, 1 for the "Per" indicating that this is the first payment, 29.912 for "Nper," and A3 for "PV". The same can be done using the "PPMT" function. These two numbers should add to $480. To build an amortization schedule, use the same functions for payments 2, 3, and so on until you reach the 29th payment. Subtract the principle amount from the balance for each new payment.

Reducing the Time

Use debt calculators and Excel functions to determine how much increasing your payment could reduce the time to clear your debt. Reducing the time it takes to clear your credit card debt might be possible by consolidating your debt. A home equity loan is an option for many. Interest rates tend to be lower than credit card rates and the interest payments might be tax deductible. Other ways of reducing the time to clear you credit card debt include transferring all balances to one low-rate credit card, or negotiating a reduced interest rate with your credit card company.


About the Author

Sara Huter is a professor of economics. Her background also includes risk management in the banking and energy industries with expertise in credit scores. Huter received an M.B.A. in finance from Texas A&M University and a B.S. in information systems from Kansas State University. She has been writing for over five years with work at, and