Why minimum payments take forever
Card minimums are usually set at the interest plus about 1% of the balance, or a small flat amount like $25. As the balance shrinks, so does the minimum, so you pay less and less principal each month. That's how a few thousand dollars can take well over a decade to pay off. Your statement includes a “minimum payment warning” box showing this; the calculator lets you test your own numbers.
Pick a payment, or pick a date
Fixed payment: enter an amount you can pay every month and see your debt-free date. Keep paying that amount even as the balance drops; that's the secret.
Pay off by a date: choose how many months you want it to take, and the calculator gives you the monthly payment to get there. Twelve to 24 months is a popular goal.
Ways to pay less interest
- Pay more than the minimum, even a little. Every extra dollar is principal.
- Pay mid-cycle. Cards charge interest on your average daily balance, so paying earlier in the month trims it.
- Ask for a lower APR. One phone call can do it.
- Use a 0% balance transfer if the fee is low and you can pay it off before the promo ends.
Did you know?
The calculator shows what your balance costs in interest every day. Seeing that number is often the push people need to pay a little extra.
Example
A $6,000 balance at 22.99% APR, paid at $250 a month, is gone in 2 years 9 months with about $2,113 in interest. To be done in exactly 2 years, pay $314.22 a month. Paying only the minimum (interest plus 1%, at least $25) would take 20 years 10 months and cost about $10,405 in interest, more than the original balance.
Frequently asked questions
How is the credit card minimum payment calculated?
It varies by issuer. A common formula is interest plus 1% of the balance, with a floor of around $25 to $40. Your card agreement lists the exact formula, and you can enter it here.
Does paying off my card help my credit score?
Usually yes. Lowering your balance relative to your limit (your utilization) is one of the quickest ways to improve a score.
Should I close the card once it's paid off?
Often it's better to keep it open with no balance, since closing it lowers your available credit. If it has an annual fee you don't want, ask about switching to a no-fee card instead.