Credit Card Payoff Calculator

Why the minimum payment is a trap

A credit card's minimum payment is not a fixed number. Issuers set it as a percentage of whatever you currently owe, commonly 1% to 3%, with a dollar floor such as $25 so the payment never gets trivially small. That structure makes the minimum fall every single month, because the balance it is calculated from is falling too.

Take a $5,000 balance at 22% APR with a 2% minimum and a $25 floor. The first month's minimum is $100, and interest alone that month is roughly $92, so barely $8 goes toward the actual debt. As the balance edges down, next month's minimum is a little smaller too, and it is still mostly covering interest. On these exact numbers the balance can still be over $1,800 fifty years later, having paid more than $34,000 in interest along the way, because the required payment keeps shrinking in step with a balance that shrinks only slightly faster than interest adds to it. Fix the payment instead, at $200 a month regardless of what the minimum says, and the same $5,000 clears in under three years for around $1,750 in total interest. The balance is identical; only the payment size stayed constant instead of shrinking.

The disclosure your statement is required to show

This is not a niche calculation. The CARD Act of 2009 requires every US credit card statement to display, in a standard box, how long minimum-only payments would take to clear the current balance and the total interest that would cost, alongside the payment amount that would clear it in 36 months for comparison. If you have never noticed that box, it is worth reading on your next statement before you assume the minimum is a reasonable way to carry a balance.

How your payment gets allocated across balances

Many cards carry more than one balance at once — a promotional rate on a balance transfer, a standard rate on new purchases, and sometimes a cash advance rate higher still. Federal rules require that the required minimum can be applied however the issuer chooses, but any amount you pay above the minimum must be applied to the balance carrying the highest interest rate first. In practice that means an extra payment on a card with a mix of rates is doing exactly what you would want it to do automatically, without you having to specify anything.

Balance transfers: what the fee actually costs

A balance transfer moves debt to a new card, usually at a promotional rate as low as 0% for a set period, in exchange for a one-time transfer fee, typically 3% to 5% of the amount moved. The comparison is straightforward: the fee is a known, fixed cost paid once, against interest you would otherwise pay every month at your current rate. On a $5,000 balance at 22% APR, one year of interest alone exceeds $1,000; a 4% transfer fee on the same amount is $200. The offer is worth taking if, and only if, you can realistically clear the transferred balance before the promotional period ends — a low rate that reverts to a high standard rate on a balance you have not yet paid down defeats the purpose.

Paying off several cards at once

With balances on more than one card, the choice is between paying the highest rate first (avalanche) or the smallest balance first (snowball). Our loan payoff calculator walks through that trade-off in detail; the short version is that avalanche costs the least overall and snowball tends to get finished, and either beats a plan that never gets followed.

What this calculator does not include

• New purchases added to the card while you are paying it down
• Late fees, which are separate from interest and can be $30 or more per occurrence
• A penalty APR, which some issuers apply after a missed or late payment and which can run well above your standard rate
• Annual fees or other card charges
• A variable APR that moves with the prime rate rather than staying fixed for the life of the balance