How it works
How credit card interest works
Card issuers quote an annual percentage rate (APR) but charge interest on your balance every day or month. This calculator uses a monthly periodic rate of APR ÷ 12 ÷ 100 and assumes no new purchases, fees or rate changes.
Paying a fixed amount
Each month: interest = balance × APR/1200; balance = balance + interest − payment, repeated until the balance reaches zero (the final payment is smaller). If your payment does not exceed the first month's interest, the balance never falls and you will see a warning.
Paying off by a target date
The payment needed to clear the balance in n months is the standard amortization formula:
payment = B × r(1 + r)n / ((1 + r)n − 1)
where B is the balance and r is the monthly rate.
Minimum-payment comparison
Minimum payments differ by issuer. We model a common formula: interest for the month plus 1% of the balance, with a $25 floor. Check your statement for your card's exact formula — card statements must also show how long minimum payments would take.
Worked examples
$6,000 balance at 22.99% APR, paying $200 a month
Paid off in 46 months (3 years 10 months) with $3,011.78 in interest. Minimum payments only (first payment about $174.95): 250 months and $10,404.74 interest.
$9,500 balance at 24.99% APR, debt-free in 24 months
You need to pay $506.98 per month. Total interest: $2,667.56; total paid $12,167.56.
Why minimum payments cost so much
Because the minimum shrinks as the balance falls, most of each payment goes to interest for years. In the first example below, paying only the minimum would take 250 months (about 20.8 years) and cost $10,404.74 in interest, versus 46 months and $3,011.78 with a steady $200 payment.
Ways to pay off a card faster
- Pay a fixed amount, not the minimum. Setting an automatic fixed payment keeps you on schedule even as the minimum drops.
- Stop adding new charges to the card you are paying down; otherwise the payoff date keeps moving.
- Ask for a lower APR. A call to your issuer, especially with a good payment history, can sometimes lower your rate.
- Consider a 0% balance transfer if you can pay the balance before the promo ends. Factor in the transfer fee (often 3%–5%).
- Consolidate with a lower-rate personal loan. Use the loan calculator to compare.
- Multiple cards? Use the debt payoff comparison to choose between the avalanche and snowball methods.
Reading your payoff results
Months to pay off is how many payments it takes until the balance reaches zero. The last payment is usually smaller than the others. Total interest is the sum of every month’s interest charge — the real cost of carrying the balance. The chart compares your plan with paying only the minimum each month so you can see how many extra years the minimum adds.
Understanding your APR
Many cards have several APRs at once: a purchase APR, a higher cash-advance APR, a promotional APR and a penalty APR that can apply after a late payment. If your balance is split across rates, payments above the minimum generally must go to the highest-rate balance first. For the most accurate estimate, enter the APR that applies to the largest part of your balance, or run the calculator separately for each portion.
Credit card interest is typically compounded daily on your average daily balance, and most cards offer a grace period on new purchases only when you pay the full statement balance each month. Once you carry a balance, new purchases usually start accruing interest right away, which is another reason to stop using a card you are paying down.
Building a realistic plan
Pick a payment you can make every month without fail, then automate it. If you get a bonus or tax refund, apply it as a lump sum and rerun the calculator with the lower balance. Track progress monthly; seeing the balance fall is one of the best motivators to keep going.
Frequently asked questions
How is credit card payoff time calculated?
The calculator applies one month of interest (APR ÷ 12) to the balance, subtracts your payment, and repeats until the balance is zero. The number of months is your payoff time.
How much should I pay to be debt-free in a year?
Choose “target number of months” and enter 12. The calculator uses the amortization formula to find the fixed payment that clears the balance in exactly 12 months.
Why does my payment barely reduce the balance?
At high APRs much of each payment covers interest. On a $6,000 balance at 22.99%, the first month’s interest is about $114.95.
Does this include new purchases?
No. It assumes you stop using the card. New charges extend the payoff time and increase interest.
Is daily compounding included?
Most cards compute interest on your average daily balance. Using APR ÷ 12 monthly gives a close estimate; your actual interest may differ slightly.
Is a balance transfer worth it?
Often, if you can pay off the balance during the 0% period and the transfer fee is lower than the interest you would pay. Compare by running this calculator at your current APR versus the fee.
What minimum payment does the comparison use?
Interest plus 1% of the balance, with a $25 minimum. Issuers use different formulas, so check your statement.