Credit Card Payoff Calculator

Q: What is a good strategy to pay off credit card debt?

Pay a fixed amount above the minimum every month. The avalanche method (highest-APR card first) saves the most money. The snowball method (smallest balance first) gives faster psychological wins. Both work — pick the one you'll stick with.

Q: How do minimum payments work on credit cards?

Most US issuers set the minimum at 2% of your balance or $25, whichever is greater. As your balance drops, the minimum drops too, stretching payoff over decades. The CARD Act of 2009 requires issuers to show payoff time on your statement.

Q: What about a balance transfer to pay off debt faster?

Balance transfer cards offer 0% APR for 12-21 months, saving significant interest. Watch for the 3-5% transfer fee, the post-promo APR (often 22%+), and the need to pay off the full balance before the promo ends.

Q: How is credit card APR calculated?

Most cards use a variable APR tied to the Prime Rate (~8.5%) plus an issuer margin. For example: 8.5% + 14.3% = 22.8% APR. The daily periodic rate (APR / 365) is applied to your average daily balance, compounded monthly.

Find out when you'll be debt-free and how much interest you'll pay. Compare minimum payments vs extra payments and see the true cost of credit card debt.

See when you'll be debt-free and how much interest you'll pay

Credit card balance

Current balance on your statement

APR

Annual percentage rate — check your statement

Extra monthly payment

Amount above the minimum you'll pay each month

Minimum payment method

Most US issuers use 2% of balance or $25 floor

Try another scenario

How to Use This Calculator

Payoff Plan tab

The default tab. Enter your credit card balance, APR, and extra monthly payment. The calculator shows when you'll be debt-free, total interest paid, and compares your plan against minimum-only and aggressive payoff strategies. Expand "More options" to change the minimum payment method.

Minimum Payment Trap tab

See the true cost of paying only the minimum. The calculator shows a year-by-year breakdown of your remaining balance, revealing how most of your payment goes to interest in the early months. This is the trap credit card companies count on.

What If I Pay More? tab

Compare four preset extra payment amounts: +$50, +$100, +$200, and +$500 per month. See exactly how many months each saves and how much interest you avoid. Even small extra payments create a powerful snowball effect.

Share your result

Every input is encoded in the URL. Click Share to send your exact scenario to a partner, financial advisor, or anyone helping you plan.

The Formula

Credit card interest compounds monthly on your remaining balance:

Monthly Interest = Balance × (APR ÷ 12)

Minimum Payment = max(Balance × 2%, $25)

Principal Paid = Payment − Monthly Interest
New Balance = Balance − Principal Paid

This loop repeats each month until Balance = $0.

The key insight: when you pay only the minimum, the payment shrinks as your balance drops. This means payoff stretches over decades and you pay far more in interest than you originally borrowed. Extra payments break this cycle by reducing principal faster, which lowers future interest charges.

Example

Lisa — Portland, OR

Lisa has an $8,200 credit card balance at 24.5% APR. Her card's minimum payment is 2% of balance or $25, whichever is greater. She's deciding whether to pay only the minimum or add $200/month extra.

Minimum payments only

Payoff time27 years

Total interest paid$14,800

Total amount paid$23,000

With $200/month extra

Payoff time3.5 years

Total interest paid$3,400

Total amount paid$11,600

By paying $200 extra per month, Lisa saves $11,400 in interest and is debt-free 23.5 years sooner. The extra $200/month costs her $2,400/year but eliminates $11,400 in interest — a 475% return on every extra dollar paid.

FAQ

What is a good strategy to pay off credit card debt? ▼

The most effective strategy is to pay a fixed amount above the minimum every month. Even $50 extra makes a significant difference. Two popular methods: the avalanche method (pay off highest-APR card first) saves the most money, while the snowball method (pay off smallest balance first) gives faster psychological wins. Both work — pick the one you'll stick with.

How do minimum payments work on credit cards? ▼

Most US credit card issuers set the minimum payment at 2% of your balance or $25, whichever is greater. As you pay down the balance, your minimum payment drops too — which means you pay less each month and the payoff stretches over decades. This is by design: lower payments mean more interest revenue for the issuer. The CARD Act of 2009 requires issuers to show on your statement how long payoff takes at minimum payments.

Should I pay more than the minimum on my credit card? ▼

Yes, almost always. Paying only the minimum on a $6,500 balance at 22.8% APR takes over 17 years and costs over $8,000 in interest. Adding just $100/month cuts payoff to about 4 years and saves thousands in interest. The math is clear: extra payments go entirely to principal, which reduces future interest charges. The only exception might be if you have an extremely low promotional APR (0%) — in that case, focus extra payments on higher-rate debt first.

What about a balance transfer to pay off debt faster? ▼

Balance transfer cards offer 0% APR for 12–21 months, which can save significant interest. However, watch for: (1) the transfer fee, typically 3–5% of the balance ($195–$325 on $6,500), (2) the post-promo APR, often 22%+, and (3) the requirement to pay off the full balance before the promo ends. A balance transfer works best when you can pay off the entire balance within the promotional period. If not, you may end up in the same situation with a new card.

How is credit card APR calculated? ▼

Most credit cards use a variable APR tied to the Prime Rate (currently ~8.5%) plus a margin set by the issuer. For example: Prime Rate 8.5% + 14.3% margin = 22.8% APR. The daily periodic rate is APR ÷ 365, applied to your average daily balance. Interest is then compounded monthly. Your APR can change when the Fed adjusts rates — every 0.25% Fed rate change moves your APR by the same amount. Check your card agreement for your specific margin.

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