Credit Card Payoff Calculator
Find out how long it will take to pay off your credit card and how much interest you'll pay.
The Formula
Monthly Interest = Balance × Daily Rate × 30
Months to payoff = −log(1 − r×P/M) / log(1+r)
r = 0.22/12 = 0.01833
Months = −log(1 − 0.01833×4500/150) / log(1.01833)
= 40 months · $1,503 interest
The Minimum Payment Trap
Credit card minimum payments are deliberately calculated to keep you in debt as long as possible. On a $5,000 balance at 22% APR, making only the minimum payment — typically 2% of the balance or $25, whichever is higher — can take over 20 years to pay off and cost more than $7,000 in interest. You end up paying back more than double what you originally owed. This calculator shows you exactly how long it takes and how much it costs, and lets you experiment with higher payments to see how quickly you can get out.
How Credit Card Interest Is Calculated
Credit card interest works differently from most loans. Your APR is divided by 365 to get a daily periodic rate, which is applied to your average daily balance each day of the billing cycle. Interest compounds daily, and new charges are added to the balance continuously. This is why carrying a balance even for a single billing cycle costs more than most people expect, and why paying in full every month — whenever possible — saves so much money over time.
Balance Transfers: A Useful Tool If Used Carefully
A balance transfer moves your high-interest credit card debt to a new card offering a low or 0% introductory APR, typically for 12–21 months. This can be an excellent strategy if you use the interest-free window to aggressively pay down the principal. The key risks: balance transfer fees (usually 3–5%), the high regular APR that kicks in after the intro period, and the temptation to run up new charges on the original card. Have a clear payoff plan before initiating any transfer.
Frequently Asked Questions
How is credit card interest calculated?
Your APR is divided by 365 to get a daily periodic rate. That rate is multiplied by your average daily balance for each day of the billing cycle. The result is added to your balance at the end of the cycle. Because interest compounds daily on unpaid balances, a 22% stated APR results in an effective annual rate slightly above 24%.
What is a good credit card APR?
The average credit card APR in the US is currently around 20–22%. Cards for people with excellent credit can be 15–18%. Store cards and subprime cards often charge 25–30% or higher. If you carry a balance, APR is critically important. If you pay in full every month, APR is largely irrelevant — focus on rewards and benefits instead.
What is a balance transfer and when does it make sense?
A balance transfer moves debt from a high-APR card to a new card with a low or 0% intro rate, usually for 12–21 months. It makes sense when the transfer fee (3–5%) is less than the interest you would otherwise pay during that period, and when you have a concrete plan to pay off the balance before the intro period ends. Do not transfer a balance if you are likely to accumulate new debt on the original card.
Should I close a credit card after paying it off?
Usually no. Closing a card reduces your total available credit, raising your utilization ratio and potentially lowering your credit score. It also reduces the average age of your accounts. Unless having the open card tempts you to overspend, keeping it open with a zero balance is generally better for your credit profile.
How much should I pay monthly to get out of credit card debt quickly?
Pay as much above the minimum as you can. A rough target: pay 1/12th of your total balance each month to clear the debt in roughly one year before compounding becomes overwhelming. Use this calculator to find the exact payment that gets you to your target payoff date.