moneyWhat this credit card calculator does
It answers two questions: how long will my card take to pay off at a fixed monthly payment, and what payment do I need to be debt-free by a target date? Either way it shows the total interest, then compares your plan with paying only the card’s minimum, so you can see the real cost of the minimum-payment trap.
How to use it
Enter the balance and the purchase APR from your statement. Choose a fixed monthly payment, or switch to a payoff deadline in months to get the payment required. Then pick the minimum-payment formula closest to your card’s: many issuers charge 1% of the balance plus that month’s interest, others a flat percentage such as 2%, both with a dollar floor.
Stop adding new purchases to the card while you pay it down, or the payoff date will move.
Assumptions
- Interest is charged monthly at APR ÷ 12 and rounded to the cent; card issuers usually use average daily balance, so actual interest may differ slightly.
- No new purchases, fees, penalty APRs or promotional rates. The APR stays fixed.
- Minimum payments are recalculated every month from the falling balance, never below the floor (or the remaining balance, if smaller).
Worked example
A $6,000 balance at 24.99% APR paid at $250 a month is cleared in 2 yr 10 mo with $2,403 of interest. To be done in 24 months instead you’d pay $320.20 a month. Paying only a minimum of 1% plus interest (first payment $184.95, never below $25) would take 21 yr 2 mo and cost $11,360 in interest.
Frequently asked questions
Why does paying the minimum take so long?
Minimum payments are mostly interest and shrink as the balance falls, so very little goes to principal each month. A fixed payment that stays the same as the balance drops pays the card off much faster.
How is the credit card minimum payment calculated?
It varies by issuer and is listed in your cardholder agreement. Common formulas are 1% of the balance plus interest and fees, or 2% to 3% of the balance, with a floor of around $25 to $40.
What payment do I need to pay off my card in a year?
Choose “Be debt-free by a date”, enter 12 months, and the calculator returns the fixed monthly payment that clears your balance in 12 payments at your APR.
Would a balance transfer or consolidation loan help?
A lower rate can cut interest substantially, but transfer fees, promotional periods ending and new spending can offset the savings. Model the new rate here, including any transfer fee in the balance.