Credit Card Payoff Calculator

Credit Card Interest — Why Minimum Payments Are a Trap

A $5,000 credit card balance at 22.99% APR with 2% minimum payments takes over 20 years to pay off and costs more than $7,000 in interest alone — more than the original debt. This happens because minimum payments shrink as your balance falls, so you're barely covering interest each month. Switching to a fixed $200/month payment pays it off in under 3 years for about $1,400 in interest. The difference: $5,600 in saved interest by committing to a fixed payment.

How Credit Card Interest Is Calculated Daily

Credit card interest accrues daily. The daily periodic rate is your APR ÷ 365. Each day your outstanding balance is multiplied by this rate and the accumulated total is added to your statement at the end of the billing cycle. This compounds continuously — even if you make your minimum payment on time each month, the interest that accrued during the month gets added to your principal, so next month's interest is calculated on a slightly higher balance. This is how a $5,000 balance can cost $12,000 to fully repay on minimum payments.

Balance Transfer Strategy — The Most Powerful Credit Card Tool

A 0% APR balance transfer card offers an interest-free window (typically 12–21 months) to pay down your principal without new interest accruing. On a $6,000 balance, a 0% transfer for 18 months means $333/month clears the entire debt with zero interest. Compare this to 22% APR where $333/month takes 22 months and costs $800+ extra. The trade-off: transfer fees are typically 3–5% of the balance ($180–$300 on $6,000), and you need good credit to qualify. Still almost always worth it.

How to Prioritize Multiple Credit Cards

If you carry balances on multiple cards, use the debt avalanche: pay minimums on all cards, then put every extra dollar toward the highest-APR card. Once that's paid, roll the freed-up payment to the next highest rate. This method saves the most total interest. If motivation is a struggle, try debt snowball (smallest balance first) — eliminating individual cards faster maintains momentum. Either approach beats making equal payments across all cards, which is the least efficient strategy.

• Never miss a payment: A single late payment can trigger a penalty APR of 29.99% on the remaining balance
• Pay before the statement closes: Interest is calculated on your average daily balance — paying mid-cycle reduces it
• Request a rate reduction: Cardholders with good payment history who call and ask get a rate reduction ~25% of the time
• Stop using the card while paying it off: New purchases continue accruing interest and offset your payoff progress