Credit Card Payoff Calculator
Calculate how long it will take to pay off your credit card debt and how much interest you will pay. See how increasing your monthly payment can save you thousands in interest and years of payments. Enter your balance, APR, and monthly payment to get started.
How to Use This Credit Card Payoff Calculator
1. Enter your current credit card balance - the total amount you owe.
2. Input your card's Annual Percentage Rate (APR) - found on your monthly statement or online account.
3. Enter your current monthly payment amount.
4. Enter a new, higher monthly payment to see how much you could save in interest and time.
5. Click "Calculate Payoff" to see your complete payoff timeline, total interest, and a month-by-month payment schedule.
What is Credit Card Interest?
Credit card interest is the cost of borrowing money when you carry a balance from month to month. Unlike installment loans with fixed payment schedules, credit card interest compounds on your remaining balance each month. This means you pay interest on previously accrued interest, which can cause debt to grow surprisingly fast if only minimum payments are made.
Credit card APRs typically range from 15% to 25% or higher, making credit cards one of the most expensive forms of borrowing. The average credit card APR in the United States is around 20%, which means a $5,000 balance costs roughly $1,000 per year in interest alone if unpaid.
The minimum payment is typically calculated as 1-3% of your balance or a fixed minimum amount (usually $25-$35), whichever is higher. While minimum payments keep your account in good standing, they are designed to maximize interest revenue for the card issuer, not to help you pay off debt efficiently.
The True Cost of Minimum Payments
Making only minimum payments on credit card debt is one of the most expensive financial mistakes you can make. Consider this example: a $5,000 balance at 20% APR with a 2% minimum payment ($100 initially) would take over 30 years to pay off and cost more than $13,000 in interest - over 2.5 times the original balance.
By simply doubling your payment to $200 per month, you could pay off the same debt in under 3 years and pay only about $1,500 in interest. That is a savings of over $11,000 just by increasing your payment by $100 per month.
Understanding Your Credit Card Statement
Your credit card statement contains important information for debt payoff planning:
- Current Balance: The total amount you owe including purchases, interest, and fees
- Minimum Payment Due: The smallest amount you can pay to keep your account current
- Payment Due Date: The deadline to avoid late fees (typically 21-25 days after statement close)
- APR (Annual Percentage Rate): Your interest rate, which may vary for purchases, cash advances, and balance transfers
- Minimum Payment Warning: Required disclosure showing how long payoff takes with minimum payments vs. a higher fixed amount
Tips to Pay Off Credit Card Debt Faster
- Pay more than minimum: Even $20-50 extra per month makes a significant difference over time
- Consider balance transfers: 0% intro APR offers can save thousands if you pay off the balance before the promotional period ends
- Use debt payoff strategies: The avalanche method (highest interest first) saves the most money, while the snowball method (smallest balance first) provides motivating quick wins
- Stop adding new debt: Put cards away or freeze them until existing balances are paid off
- Automate payments: Set up automatic payments above the minimum to ensure consistent progress
- Negotiate your rate: Call your card issuer and request a lower APR, especially if you have a good payment history
Credit Card Payoff Formula
The formula to calculate months to pay off credit card debt is: N = -log(1 - (r x B / P)) / log(1 + r)
Where: N = Number of months, r = Monthly interest rate (APR / 12), B = Balance, P = Monthly payment. Your payment must exceed the monthly interest charge (B x r) or the debt will never be paid off.