Months to debt-free · Total interest · Minimum payment trap · Compare payoff strategies · 2026
The Real Cost of Minimum Payments
Minimum payments are designed to keep you in debt as long as possible. On an $8,000 balance at 22% APR, paying only the minimum (2% of balance) means you'll take over 30 years to pay it off — and pay more than $12,000 in interest on top of the original $8,000 debt. That's 2.5x the original balance in interest alone.
Strategies to Pay Off Faster
- The Avalanche Method — Pay minimums on all cards, throw every extra dollar at the highest-APR card first. Mathematically optimal, saves the most interest.
- The Snowball Method — Pay minimums on all cards, attack the smallest balance first. Psychologically motivating, slightly more interest paid overall.
- Balance Transfer — Move your balance to a 0% APR card (typically 12–21 months). Pay aggressively during the 0% period. Transfer fee is usually 3–5%.
- Debt Consolidation Loan — Replace high-APR credit card debt with a lower-rate personal loan. Can cut your effective rate from 22% to 10–12%.
What APR Are You Paying?
As of 2026, the average credit card APR in the US is approximately 21–22%. Premium rewards cards often charge 24–29%. Store credit cards frequently exceed 30%. If you're carrying a balance, look for balance transfer cards offering 0% introductory rates or consider a personal loan at 8–12% to consolidate and reduce your interest cost immediately.
Frequently Asked Questions
How is credit card interest calculated daily?
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Credit card interest is calculated using your Daily Periodic Rate (DPR), which is your APR divided by 365. If your APR is 22%, your DPR is 0.0603%. Each day you carry a balance, that rate is applied to your average daily balance. This is why paying more than the minimum — and paying earlier in the month — reduces your interest charges meaningfully.
Does paying off a credit card hurt my credit score?
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No — paying off a credit card almost always helps your credit score. Your credit utilization ratio (balance ÷ limit) is the second biggest factor in your FICO score. Reducing a $8,000 balance on a $10,000 limit card from 80% to 0% utilization can increase your score by 50–100+ points over a few months.
Should I close my credit card after paying it off?
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Generally no — closing a card reduces your total available credit and can lower your credit score by increasing your overall utilization ratio. Keep the card open with a $0 balance, or make one small purchase per month and pay it off immediately to keep the account active. Only close it if the annual fee isn't justified.