How credit card payoff works
Credit cards charge compound interest on the balance you carry. Each month the card adds interest equal to your balance times the monthly rate (your APR divided by 12), then your payment is subtracted. Because interest is charged on the remaining balance, the share of each payment that goes to principal grows as the balance shrinks.
New balance = (Balance × (1 + APR ÷ 12)) − payment
The minimum-payment trap
A minimum payment is typically just 1%–3% of the balance plus interest. On a $6,000 balance at 22% APR, an early minimum payment is mostly interest, so the balance barely falls — dragging payoff out for over a decade and costing thousands in interest. Paying a flat, higher amount each month is what breaks the cycle.
Fixed payment vs. target date
If you choose a fixed monthly payment, the calculator works out how many months it takes and what the interest totals. If you set a target number of months instead, it solves for the monthly payment that clears the balance exactly on time. The payment must always exceed one month of interest, or the balance can never reach zero.
A quick example
A $6,000 balance at 22% APR paid at $250/month takes about 32 months and roughly $1,980 in interest. Bumping the payment to $350 a month clears it in about 21 months and cuts the interest to around $1,270 — saving more than $700.
Frequently asked questions
How is credit card interest calculated?
Card interest compounds monthly on your balance. Divide your APR by 12 to get the monthly rate, multiply it by the balance to get that month's interest, add it to the balance, then subtract your payment. The remaining balance carries to the next month, so the interest you pay shrinks as the balance falls.
Why does paying only the minimum cost so much?
Minimum payments are usually a small percentage of the balance, so most of each payment goes to interest and the principal barely moves. That stretches payoff over many years and can more than double what you repay. Paying a fixed amount well above the minimum is what actually clears the debt.
What happens if my payment is too low?
If your monthly payment is less than or equal to one month of interest, the balance never goes down — it grows. The calculator flags this: you need to pay more than the monthly interest charge for the balance to fall at all.
Is it better to pay a fixed amount or hit a target date?
Both work. Paying a fixed amount each month is simple and shows you the payoff date that results. Setting a target date instead tells you the exact monthly payment required. Use whichever matches how you budget — this tool does both.
How can I pay off my credit card faster?
Pay more than the minimum every month, make payments more often to reduce the average balance, stop adding new charges to the card, and consider moving the balance to a lower-APR card or a 0% balance-transfer offer. Even small increases to a fixed payment cut months and interest off the payoff.
Disclaimer: This calculator assumes a fixed APR, no new charges, and equal monthly payments applied at month-end. Real cards may use daily compounding, variable rates, fees, and changing minimum payments, so your actual payoff may differ. This is an estimate, not financial advice.