How credit card interest really works
Credit card APRs are much higher than mortgage or auto loan rates, often 20% or more. Interest is calculated on the balance you carry, usually daily, and added to what you owe every month. If you only make the minimum payment, a large share of it goes to interest and the balance falls very slowly.
This calculator uses a monthly approximation: each month it adds balance × APR ÷ 12 in interest, then subtracts your payment. Card issuers compound daily, so your real numbers may be slightly higher, but the difference is usually small.
Two ways to use the calculator
1. "I can pay a set amount a month. How long will it take?"
Enter your balance, APR and the payment you can afford. You'll see how many months it takes, the total interest and the month you'll be debt-free. If the payment is too small to cover the monthly interest, the calculator warns you, because at that level the balance would never go down.
2. "I want to be debt-free in a set number of months. What should I pay?"
Switch the mode and enter a target. The calculator works out the fixed monthly payment needed. It's a useful way to set a concrete goal: "I'll be debt-free by next summer if I pay this much a month."
The cost of paying a little more
Here's a $6,000 balance at 22.9% APR at different payment levels:
| Monthly payment | Time to pay off | Total interest |
|---|---|---|
| $150 | 6 yr 5 mo | $5,435 |
| $250 | 2 yr 9 mo | $2,101 |
| $400 | 1 yr 6 mo | $1,136 |
| $600 | 1 yr | $722 |
Raising the payment from $150 to $250 cuts more than three and a half years and saves over $3,300 in interest. Usually the most effective thing you can do with credit card debt is pay more than the minimum.
Strategies to get out of credit card debt faster
- Avalanche method: pay the minimum on every card and put any extra money toward the card with the highest APR. This is mathematically the cheapest approach.
- Snowball method: put extra money toward the smallest balance first. Paying off whole cards quickly can keep you motivated.
- Balance transfer: move debt to a card with a 0% introductory APR, then pay it off before the promotion ends. Watch for transfer fees.
- Debt consolidation loan: a personal loan with a lower fixed rate can replace several card balances with one payment. Compare the numbers with our loan calculator.
- Stop adding to the balance. Put the card aside while you pay it down, or the payoff date keeps moving.
Frequently asked questions
Why is my credit card balance going down so slowly?
Credit cards charge high interest on the balance every month. If your payment is only slightly above the monthly interest charge, very little goes toward the balance itself. Raising the payment even a little can shorten payoff time a lot.
Should I use the avalanche or snowball method?
The avalanche method (highest APR first) saves the most interest. The snowball method (smallest balance first) gives quicker wins that help some people stay motivated. Either works far better than paying only the minimums.
Is a balance transfer worth it?
A 0% balance transfer can save a lot of interest if you can pay off the balance before the promotional period ends. Factor in the transfer fee, often 3% to 5%, and avoid new purchases on the card.
Results are estimates for educational purposes and assume no new purchases or fees.