Credit Card Payoff Calculator

Credit card interest is calculated daily on the average daily balance. The daily rate is APR / 365. Each day, interest is added to your balance, and the next day's interest is charged on the new, slightly higher balance — pure compounding. This is why a 22% APR actually costs about 24.36% effective annually.

When you pay only the minimum, most of your payment goes to interest instead of principal, so the balance barely moves.

Paying $50 or $100 above the minimum has an outsized effect because the entire extra amount reduces principal, which reduces tomorrow's interest, which frees up more of next month's payment for principal — a snowball in your favor.

A $5,000 balance at 22% APR with a 2% minimum takes about 228 months (19 years) to pay off and costs roughly $6,800 in total interest — you pay $11,800 to borrow $5,000.

Triple that payment to about 6% (so around $300/month fixed) and the same balance clears in 20 months with $1,050 in interest. That's the power of getting above the minimum.

Our calculator's minimum-payment mode simulates the declining minimum month-by-month so you see the real timeline — not the issuer's convenient marketing number.

If you have two or more cards, the two classic strategies are:

• avalanche (pay minimums on all, throw everything extra at the highest-APR card)
• snowball (pay minimums on all, throw everything extra at the smallest balance)

Avalanche saves the most total interest — it's mathematically optimal. Snowball gives you quick wins: that first card cleared in 3 months is a huge motivation boost.

Harvard Business Review research found that snowball users were more likely to complete their payoff plan, so their real-world total cost was lower. Pick the method you'll actually stick with, then use our calculator to model each card individually.

Payoff time depends on balance, APR, and monthly payment via the loan-payoff formula.

On a $5,000 balance at 20% APR, paying $150 a month clears it in about 49 months and costs roughly $2,359 in interest; raising the payment to $250 cuts it to about 25 months and $1,133 interest.

The higher the payment relative to interest, the faster the balance falls. This calculator solves for payoff time or the payment needed to hit a target date.

Because interest compounds on the remaining balance, small payment increases have outsized effects.

On the $5,000/20% example, going from $150 to $250 a month — a $100 increase — cuts payoff from about 49 to 25 months and saves roughly $1,227 in interest.

Every extra dollar above the minimum attacks principal directly. The CFPB emphasizes that paying even a little more than the minimum dramatically shortens the timeline.

A balance transfer moves high-interest debt to a card offering 0% APR for an introductory period (often 12-21 months), so payments go entirely to principal during that window. Most charge a transfer fee (typically 3-5% of the amount).

The CFPB advises paying off the balance before the promo rate ends, since the rate then jumps.

Done right, a balance transfer can save substantial interest; done carelessly, the fee and post-promo rate erode the benefit.

Credit card interest usually compounds daily: the APR is divided by 365 to get a daily rate, applied to your average daily balance, so carrying a balance costs a little more than the nominal APR suggests.

Interest is charged only if you carry a balance past the grace period — paying the statement balance in full each month avoids interest entirely.

Per the Federal Reserve, average card APRs have run high, making revolving balances one of the costliest common debts.

Minimum payments are set low (often 1-3% of balance plus interest), so most of the payment covers interest and the balance barely moves — stretching payoff over years or decades and multiplying the total cost.

The CARD Act requires issuers to print a minimum-payment payoff timeline on statements to expose this.

Paying a fixed amount well above the minimum, rather than a percentage that shrinks with the balance, is the key to escaping the trap.

Your credit utilization — balances divided by credit limits — is a major scoring factor, and paying down cards lowers it, often raising your score.

The CFPB suggests keeping utilization under 30%, with lower being better.

A higher score can qualify you for a balance-transfer or consolidation offer that speeds payoff further. Because utilization is calculated per card and overall, paying down your highest-utilization card first can give a quick score lift.

If you carry balances on several high-APR cards, consolidating into a lower-rate personal loan or a balance-transfer card can cut interest and simplify to one payment.

It makes sense when the new rate (including fees) beats your cards' average APR and you stop charging new purchases.

The CFPB cautions that consolidation frees up card limits that, if used, recreate the debt. Consolidate as part of a disciplined payoff plan, not as a reset.

Common mistakes include:

• paying only the shrinking minimum
• continuing to charge while paying down
• chasing a balance transfer without a payoff plan before the promo ends
• closing paid cards (hurting utilization)
• ignoring the daily-compounding cost of carrying any balance

Pay a fixed amount above the minimum, stop new charges, use 0% offers strategically, keep old cards open, and aim to pay the statement balance in full once debt-free.