Credit Card Payoff Calculator

What the minimum payment actually pays for

Start with the number that makes the whole thing clear: at 24% APR the interest charge is 2% of the balance every month. On $10,000 that is $200 a month, before a single dollar of the debt moves. A 2% minimum payment is therefore $200 — the entire payment is consumed by interest, and $0.00 reaches the principal. That is not slow progress. That is no progress, and the account is designed to keep working that way.

Raise the minimum to 3% and the picture improves without becoming good. Month one: $300 paid, $200 of it interest, $100 to principal. Month two: the balance is $9,900, so the minimum falls to $297 — $198 interest, $99 to principal. The payment shrinks every month because it is a percentage of a balance that has barely moved. On $10,000 at 24%, a 3% minimum takes roughly 303 months — about 25 years — and costs around $18,887 in interest. The same $10,000 cleared at a flat $300 a month takes 56 months and costs $6,644. Same balance, same rate, same first payment of $300. The only difference is whether the payment stays at $300.

How the CARD Act changes the formula

Since 2010 the CARD Act has required the disclosed minimum to include at least 1% of the principal balance plus that period's interest and fees, or a fixed dollar floor — usually $25 to $35 — whichever is higher. Issuers may set a higher percentage, and most set 1% to 3%. Two things follow from that structure:

• The minimum is defined as interest first. By construction it always covers the interest charge, so the leftover — the part that actually reduces the debt — is small by design at high rates.
• The dollar floor is the only reason a low-rate card ever clears. Without a floor, a percentage-of-balance minimum shrinks toward zero and the balance decays geometrically forever. The floor forces a real payment once the balance is small.

The same law also requires issuers to print a minimum payment warning on each statement: an estimate of how long it would take to pay off the balance making only minimums, and what it would cost. It is worth reading on your next statement — it is the same calculation this page runs, produced by the issuer.

Why paying more early beats paying more later

Interest is charged on the balance that exists. Every dollar of principal you remove early stops generating interest for every month the balance survives — and if you remove enough of it, it shortens the payoff too, which removes further months of interest. On $10,000 at 24% with a $300 payment, the arithmetic is stark:

• $100 of extra principal in month one saves about $194 of interest over the life of the payoff.
• The same $100 in month fifty saves about $12.62.
• $100 extra every month for a year (then back to $300) cuts the payoff from 56 months to 46 and saves about $1,707.
• $400 a month instead of $300 — a payment you can stop at any time, not a contract — clears the balance in 36 months for $4,001 in interest.

Early money is worth roughly fifteen times late money on the same balance. This is also why the order in which you attack debt matters: a dollar sent to a 24% balance is worth more than the same dollar sent to a 6% balance, because it stops more interest per month.

When a balance transfer is worth its fee

Transfer fees are usually 3% to 5% of the amount moved, charged when you move it. On $10,000 a 3% fee is $300. That $300 is not free, but set it against what the balance costs to carry: at 24%, $10,000 accrues about $6.58 of interest per day, so the fee is worth roughly 46 days of the interest you are already paying. Any promotional period meaningfully longer than that is priced in your favour — the arithmetic is not the hard part.

The catch is behavioural and it is where transfers go wrong. A promotional rate expires, and whatever is left when it does reverts to a standard APR, often higher than you started with. Transfers only help if the payments during the promotional window go to principal — which means not running new spending on the card, because new purchases usually do not get the promotional rate and they reset the clock on paying anything down. Do the arithmetic, but only move the balance if the monthly payment during the promo is large enough to make a real dent.

This tool models one card

Everything here describes a single account: one balance, one rate, one payment. If you are carrying balances on several cards, the ordering question — which card to attack first — is a different calculation, because it needs a shared monthly budget split across accounts with different rates, different floors and different tax treatment of the interest.

The two common strategies are the avalanche (throw every spare dollar at the highest-rate balance; mathematically cheapest) and the snowball (clear the smallest balance first; the quickest visible win, and people stick with it more often). The honest position: avalanche saves the most interest, snowball wins on follow-through, and the difference between them is usually far smaller than the difference between either one and paying minimums. If you have several cards, run each one here at its own balance and rate to see what it is actually costing you per month, then send the surplus to the one at the top of that list.

Frequently asked questions

Why does my minimum payment barely move the balance?

Because the minimum is built to cover the interest first. At 24% APR the interest charge is 2% of the balance each month, so a 2% minimum payment is entirely interest and nothing reaches the principal. At a 3% minimum, $300 of a $10,000 balance buys $200 of interest and only $100 of principal — and because the minimum is a percentage of a falling balance, the principal portion shrinks every month.

What does the CARD Act minimum payment formula require?

Since 2010 the CARD Act has required the disclosed minimum to include at least 1% of the principal balance plus that period's interest and fees, or a fixed dollar floor — commonly $25 to $35 — whichever is greater. Issuers can set a higher percentage, and many use 1% to 3% of the balance with a floor. The result is a payment that always clears the interest and, in a high-rate environment, very little else.

Is it bad to pay only the minimum if I can afford more?

Paying the minimum keeps the account current and avoids late fees, so it is never the wrong thing to do — it is just the most expensive way to carry the balance. On $10,000 at 24% APR the minimum is around $200 a month and the balance does not fall at all, so the payments have no end. Every dollar above the interest charge is what actually retires the debt.

Should I use a 0% balance transfer to escape this?

Run the arithmetic rather than assuming. A 3% transfer fee on $10,000 is $300, which is about 46 days of interest at 24% — so any promotional period longer than roughly two months of interest benefit already covers the fee. The real risk is behaviour: if the promotional rate expires before the balance is paid down, the reverted rate applies to whatever is left, and a transfer only helps if payments during the promo go to principal.

Does paying an extra $50 or $100 a month really matter?

More than most people expect, and earlier matters far more than later. On $10,000 at 24% APR with a $300 payment, an extra $100 in the first month saves about $194 of interest over the life of the payoff. The same $100 in month fifty saves only about $13. Raising the payment to $400 a month cuts the payoff from 56 months to 36 and the interest from $6,644 to $4,001.

Why is my real payoff different from this calculator?

Issuers compound interest daily on the average daily balance rather than once a month on the statement balance, and most add new purchases, fees and any promotional balances into the same account. The payment date, the number of days in the billing cycle and new spending all move the result by a few dollars a month. This tool uses a monthly rate of APR divided by 12, which is the standard approximation and lands within a small margin of the issuer's own figure.