Credit card payoff calculator
This models a fixed monthly payment. A card minimum payment is a percentage of the balance and therefore falls as the balance does, which stretches the payoff far longer than a fixed payment of the same starting size.
A $6,000 balance at 22.9% cleared over 36 months costs $231.95 a month and $2,350.05 in interest. Paying an extra $50 a month clears it in 28 months and saves $577.86. Card interest is high enough that small extra payments matter a great deal.
How to plan a card payoff
The minimum payment is the trap this page exists to expose, and the trap is structural rather than arithmetic. A minimum is calculated as a share of what you owe, so it falls every month that you pay it, and the proportion reaching the principal barely improves. Regulation Z does not set the formula: appendix M1 says card issuers "must use the minimum payment formula(s) that apply to a cardholder's account", so each issuer has its own. A common shape is one per cent of the balance plus the month's interest, with a floor of around $25.
What that shape does to this page's own balance
Take the $6,000 at 22.9% and pay exactly that minimum every month, letting it fall as the balance falls. The debt clears in 250 months, close to twenty-one years, and costs $10,361.86 in interest, well over the original spending. Now take the same first payment, $174.50, and never reduce it. The balance clears in 57 months and costs $3,855.33. Freezing the payment costs nothing at all in month one and removes sixteen years and $6,506 of interest. Nothing else available on a card balance comes close to that, and it requires no extra money, only a standing order instead of a variable direct debit.
Where the payment goes in the first month
On the default 36-month schedule the first $231.95 splits into $114.50 of interest and $117.45 of principal. Barely half of it is retiring debt, on a term short enough that most people would expect better. Every month the interest share falls, and the reason the total is $2,350.05 rather than something small is that the early months are doing so little.
Where several cards exist, paying the highest rate first saves the most money. Paying the smallest balance first works better for some people because the early clearance sustains the effort, and a method that gets followed beats a method that does not.
What people use it for
- Planning to clear a card balance
- Seeing what an extra 50 a month achieves
- Comparing a balance transfer against paying down directly
- Understanding why minimum payments take so long
- Turning the current minimum into a fixed payment with an end date
- Checking the 36-month figure printed on your statement
Questions
At a fixed payment, the schedule above. On a minimum of one per cent of the balance plus interest, the same $6,000 at 22.9% takes 250 months and costs $10,361.86.
The minimum is a share of the balance, so it shrinks as you pay and the proportion reaching principal hardly improves. The debt approaches zero rather than reaching it.
Freezing the payment at today’s minimum. On these numbers that is $174.50, and never reducing it clears the balance in 57 months instead of 250, for $3,855.33 of interest instead of $10,361.86.
No. Regulation Z requires issuers to use their own account formula when producing the repayment disclosure, so the shape varies between cards. Read the number off your statement rather than assuming a rule.
A required disclosure. Issuers must tell you what to pay each month to clear the current balance in 36 months, and the CFPB notes those amounts are calculated on the current balance and take no account of future purchases.
$231.95 for 36 months, $2,350.05 of interest and $8,350.05 paid in total on a $6,000 balance.
$117.45 of principal, with $114.50 going on interest at 22.9%. Just under half of the opening payment is buying nothing, and that share falls every month as the balance does.
Clears it in 28 months instead of 36 and saves $577.86. An extra $25 saves $331.40 and an extra $100 saves $921.04.
$770.02 of interest over 12 months, $1,534.61 over 24, $2,350.05 over 36, $3,215.05 over 48 and $4,127.90 over 60. Each extra year adds between $765 and $913, and the increments grow rather than shrink.
Highest rate saves the most money. Smallest balance first works better for some people psychologically, and either beats neither.
Usually, if you clear the balance within the promotional period. A 3% fee on $6,000 is $180, against $2,350.05 of interest over three years at 22.9%.
The remaining balance reverts to the standard rate, often a high one. Divide the transferred balance by the number of promotional months and treat that as the required payment, not the minimum.
Enormously. New spending resets the progress, and the statement’s payoff figure is computed on today’s balance with no allowance for it.
Cards commonly carry several rates at once: purchases, cash advances and balance transfers are often priced differently, and a missed payment can trigger a penalty rate. Use the rate that applies to the balance you are clearing.
Not exactly. Cash advances usually start accruing interest immediately with no grace period and often carry an upfront fee, so the true cost is above what a plain balance at the same rate would suggest.
No, and there rarely is once a balance is being carried. A grace period generally applies only when the statement balance is paid in full, so the calculation here assumes interest is accruing throughout.
Not automatically. The arithmetic on this page ends at zero, but a closed account removes available credit and can change how your utilisation is read.
Contact the issuer before missing the payment rather than after. A missed minimum can trigger a fee and a penalty rate, which makes every figure on this page worse at once.
This calculator assumes one balance at one rate. On a real card carrying several rates, allocation rules govern where an amount above the minimum goes, and it is not always where you would want it.
No. The balance and the rate are computed in your browser and neither is stored or transmitted.