How credit card interest works
Credit cards charge interest based on your annual percentage rate (APR). Each month, roughly one-twelfth of the APR is applied to your balance. With typical card APRs above 20%, interest builds quickly, and if you only pay the minimum, a large share of every payment goes to interest instead of reducing what you owe.
This calculator simulates your payoff month by month: it adds one month of interest to the balance, subtracts your fixed payment, and repeats until the balance reaches zero. It then reports how many months it takes and the total interest you will pay. If your payment is smaller than the first month's interest, the balance would never go down, and the calculator will tell you.
Example
A $5,000 balance at 22.9% APR with $200 monthly payments takes about 35 months to pay off and costs roughly $1,860 in interest. Raising the payment to $300 cuts the time to about 21 months and saves nearly $800.
Strategies to pay off cards faster
- Pay more than the minimum. Even an extra $25–$50 per month shortens the payoff noticeably.
- Avalanche method: put extra money toward the card with the highest APR first. This minimizes total interest.
- Snowball method: pay off the smallest balance first for quick wins and motivation.
- Balance transfer: a 0% intro APR card can pause interest, but watch for transfer fees (often 3–5%) and the rate after the promo ends.
- Stop adding new charges to the card you are paying down, or the payoff date keeps moving.
Why it matters for your credit
Lowering your balances reduces your credit utilization ratio, one of the biggest factors in credit scores. Keeping utilization under 30%, and ideally under 10%, can help your score while you save on interest.
Frequently asked questions
Why is my payoff taking so long?
At high APRs much of each payment goes to interest. Increasing your payment is the fastest way to shorten the timeline.
Does this include new purchases?
No. It assumes no new charges, fees or rate changes.
Is the avalanche or snowball method better?
Avalanche saves the most money; snowball can be easier to stick with. The best method is the one you will follow.