Credit Card Payoff Calculator

How the credit card payoff calculator works

Credit card interest is charged every month on the balance you carry. The calculator applies one twelfth of the APR to the balance, subtracts your payment and repeats the process month after month until the balance reaches zero. It assumes you make no new purchases and that the APR stays the same, so it shows the best case for a given payment.

It works in two directions. Choose how long with a fixed payment to see how many months your current payment needs and the interest you will pay along the way. Choose payment to clear it by a date to find the monthly amount that makes you debt-free in the number of months you pick. The table below the results compares payoff times from one to five years for your balance.

The credit card payoff formulas

n = −ln(1 − B × r ÷ P) ÷ ln(1 + r)
P = B × r ÷ (1 − (1 + r)⁻ⁿ)

• n: number of months to pay off the card
• B: current balance
• P: monthly payment
• r: monthly interest rate, the APR ÷ 12 (22% APR = 0.22 ÷ 12 = 0.018333)

If B × r is equal to or larger than P, the payment does not even cover the monthly interest and the balance never goes down: the calculator warns you when this happens.

Example: a $5,000 balance at 22% APR

Paying $150 a month on a $5,000 balance at 22% APR clears the card in 52 months (4 years and 4 months) and costs $2,798.05 in interest, so you pay back $7,798.05 in total. Raise the payment to $250 and the card is paid off in 26 months with $1,285.72 of interest: $1,512.33 less. To be debt-free in exactly two years you need to pay $259.39 a month.

The first month's interest on this balance is $91.67. A payment of $100 barely covers it: the card would take 137 months, more than 11 years, and cost $8,678.06 of interest, far more than the original balance.

The minimum payment trap

Minimum payments are usually a small percentage of the balance, sometimes plus the month's interest, and they shrink as the balance falls. That keeps the monthly bill low but stretches repayment over many years. Regulators know this: in the US, card statements must show how long it would take to pay off the balance with minimum payments only and how much you would need to pay each month to clear it in three years, and Australian statements carry a similar minimum repayment warning. In the UK, card providers must contact you if over 18 months you have paid more in interest and charges than you have repaid of the balance. Find out what happens if you cannot pay your credit card statement.

APR on US, UK, Canadian and Australian cards

In the US and Canada the APR on your card agreement is the yearly rate the issuer uses to work out interest, often as a daily rate on your average daily balance; the monthly method used here gives a very close estimate. In the UK and Ireland cards are advertised with a representative APR, which can include an annual fee and so be higher than the interest rate applied to purchases: for the most accurate result, use the purchase rate shown on your statement. Everywhere, paying the full statement balance by the due date usually means no interest on purchases at all. New to cards? Read how credit cards work.

Tips to pay off your credit card faster

• Pay more than the minimum, even a small amount: on the example above, an extra $50 a month (from $150 to $200) clears the card in 34 months and saves $1,048.17 of interest.
• Stop adding new purchases to the card while you pay it down, or the payoff date keeps moving.
• Tackle the highest APR first if you have several cards (the avalanche method): it costs the least interest. Clearing the smallest balance first (the snowball method) can help motivation.
• Consider a 0% balance transfer if you can clear the balance within the promotional period: set the APR to 0 to plan it, and add the transfer fee.
• Compare a cheaper personal loan: its fixed payment and end date can cost less than card interest. Check the numbers with our loan calculator.

How long does it take to pay off $5,000 on a credit card?

At 22% APR, paying $150 a month clears a $5,000 balance in 52 months (4 years and 4 months) and costs $2,798.05 in interest. Paying $250 a month cuts it to 26 months and $1,285.72 of interest. Both figures assume you stop using the card for new purchases.

How much should I pay to clear my credit card in two years?

For a $5,000 balance at 22% APR you need to pay $259.39 a month to be debt-free in 24 months, with $1,225.38 of interest in total. To clear it in 12 months the payment rises to $467.97, but the interest falls to $615.66.

Why is my credit card balance not going down?

Because most of your payment is eaten by interest. On a $5,000 balance at 22% APR the first month alone adds $91.67 of interest, so a $100 payment reduces the balance by only a few dollars: it would take 137 months and $8,678.06 of interest to clear. If your payment is lower than the monthly interest, the balance never goes down at all.

How is credit card interest calculated?

Card issuers turn the APR into a daily or monthly rate and charge it on the balance you carry. Many US issuers apply a daily rate (APR ÷ 365) to your average daily balance; this calculator uses APR ÷ 12 each month, which gives a very close estimate. If you pay the full statement balance by the due date, most cards charge no interest on purchases.

Does paying more than the minimum really help?

Yes, a lot. On a $5,000 balance at 22% APR, raising the payment from $150 to $250 a month saves $1,512.33 of interest and clears the card 26 months sooner. Minimum payments shrink as the balance falls, which is why paying only the minimum can take many years.

Can a 0% balance transfer help me pay off my card?

It can, if you clear the balance before the promotional period ends. Set the APR to 0 to plan your payments: $5,000 at 0% over 18 months needs $277.78 a month. Remember to add the transfer fee most cards charge, usually a percentage of the amount moved.