Credit Card Payoff
Calculate how long it takes to pay off your credit card and see how much you can save by paying more.
| Monthly | Months | Total Interest | Savings |
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How Credit Card Interest Works
Credit cards use compound interest calculated daily. Your APR is divided by 365 to get the daily rate, then applied to your balance each day. This means interest accumulates faster than simple loans.
Monthly Interest ≈ Balance × (APR ÷ 12)
For example, a $5,000 balance at 22.99% APR accrues about $96 in interest per month. If you only pay $100, just $4 goes toward your actual debt.
The Minimum Payment Trap
Credit card minimum payments are designed to keep you in debt longer. Typically set at 1-3% of your balance or $25-35 (whichever is greater), minimum payments can take 15-30 years to pay off a balance.
On a $5,000 balance at 22.99% APR, paying only the minimum ($100) means you’ll pay $7,723 total over 9+ years — that’s $2,723 in interest alone!
Strategies to Pay Off Faster
- Pay more than minimum: Even $50 extra per month can cut years off your payoff time and save hundreds in interest.
- Avalanche method: Pay minimums on all cards, put extra money toward the highest APR card first. Mathematically optimal.
- Snowball method: Pay off smallest balance first for psychological wins. Great for motivation.
- Balance transfer: Move debt to a 0% APR intro card. Watch for transfer fees (typically 3-5%).
Watch Out For
- Promotional rate expiration: 0% APR offers typically last 12-21 months. Know when yours ends — rates can jump to 20%+.
- Cash advance APR: Often 25-30% with no grace period. Interest starts immediately.
- Penalty APR: One late payment can trigger rates up to 29.99% on your entire balance.
- New purchases: While paying off debt, new charges may not get a grace period, accruing interest immediately.