Credit Card Payoff Calculator

How credit card payoff time and interest are calculated

Each month the card adds interest on what you still owe, and your payment comes off after that. A simple estimate of one month's interest is your balance times the APR divided by 12. On $5,000 at 22.36%, that is $93.17 in the first month. Of a $200 payment, $93.17 goes to interest and $106.83 to the balance, which drops to $4,893.17. The next month's interest is a little smaller, $91.18, so a little more of the payment reaches the balance, and so on until it is gone: 33 payments of $200 and a last one of $192.96, or $6,793 in total, of which $1,793 is interest.

To pay a card off by a set date, the calculator works backward with the standard loan formula: payment = balance × r ÷ (1 − (1 + r)⁻ⁿ), where r is the APR divided by 12 and n is the number of months. Clearing $5,000 at 22.36% in 12 months takes $468.84 a month and $626 of interest. Stretching it to 24 months lowers the payment to $260.29 but doubles the interest to $1,247. At 0% APR the payment is just the balance divided by the months.

Your card company may count interest by the day instead. The CFPB says many issuers calculate interest daily on your average daily balance, using a daily periodic rate: the APR divided by 360 or 365. Regulation Z lets issuers assume either a monthly or a daily rate, with months of equal length, when they work out the payoff estimates printed on your statement. A monthly estimate is a fair guide, though your statement can differ by a little.

How long to pay off $5,000 on a credit card at different payments

The first step up matters most. At $100 a month, only $6.83 of the first payment reaches the balance because interest takes $93.17, so the card takes over 12 years to clear and the interest ends up nearly twice the original balance. Adding $50 to a $200 payment pays the card off 8 months sooner and saves $478; adding $100 saves 13 months and $750. If your payment is at or below the first month's interest, the balance never goes down, and the calculator tells you the amount you need to beat.

Paying off more than one card? The debt payoff calculator lines up all your debts and compares paying the highest rate first (avalanche) with the smallest balance first (snowball).

Why minimum payments take so long, and the 36-month figure on your statement

Under the Credit CARD Act rules in Regulation Z, each credit card statement carries a "Minimum Payment Warning": if you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. The statement must show how long paying only the minimum would take and what it would cost in total, and, in most cases, the monthly payment that would pay the balance off in 36 months, with its total cost and how much it saves. If the minimum payment would never pay off the balance because it is less than the interest charged each month, the statement has to say that instead.

For $5,000 at 22.36%, the 36-month payment is about $192 a month, with about $1,908 of interest. The CFPB says these figures are based on your current balance and do not count future purchases, and that you only have to pay the minimum, though paying more cuts the interest you pay. The 36-month box can be left off when minimum payments would clear the balance in 3 years or less. Your minimum comes from your card's own formula, which varies by issuer, so this calculator does not guess it: enter the minimum on your statement as a fixed payment for a rough comparison.

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