Credit card payoff calculator
Enter your balance, your APR and a monthly payment to see how long the card takes to clear and what the interest costs. Add a number of months to see the payment that clears it in that time.
This answer is for the example values in the boxes above. $5,000 at 22% APR, $200 a month, paid off in 24 months. Change the boxes to see your own answer.
The interest is charged each month at one twelfth of the APR on what is left. A real card may count the interest by the day, and new purchases add to the balance, so the statement decides.
How it works
The calculator charges interest each month on what you owe, at one twelfth of the APR. Your payment pays that interest first, and what is left lowers the balance. The next month’s interest is then a little smaller.
Enter a payment and the calculator counts the months until the balance is gone and adds up the interest. Enter a number of months and it finds the payment that clears the balance in exactly that time, with the standard loan formula. Fill in both to see both answers, or leave one field empty. If your payment is no more than the interest of the first month, the balance never falls, and the calculator says so.
A worked example
A card has a balance of $5,000 at 22 percent APR. The interest in the first month is $91.67. With $200 a month it takes 34 months, which is 2 years and 10 months, and you pay $1,749.88 in interest, $6,749.88 in all.
The tool opens on this example. To clear the card in 24 months you would pay $259.39 a month, and the interest would be $1,225.38.
The payment changes the cost a great deal. $100 a month takes 137 months and costs $8,678.06 in interest. $150 takes 52 months and $2,798.05. $300 takes 21 months and $1,021.60, and $500 takes 12 months and $574.44.
What your statement shows
Regulation Z is the federal rule for credit card statements. It asks the card issuer to print a minimum payment warning on the statement, with an estimate of how long the minimum payments would take to pay the balance and what they would cost in all. It also asks for the monthly payment that would clear the balance in 36 months. Those are the kinds of figures that this calculator works out for any payment that you choose.
What it leaves out
New purchases, fees and a rate that changes are not in the figures. A real card may work out the interest from the daily balance, so the statement decides. If you have several cards, work out each balance on its own.
Sources
Questions
How long will it take to pay off a credit card?
It depends on the balance, the APR and the payment. A balance of $5,000 at 22% paid with $200 a month takes 34 months, which is 2 years and 10 months, and costs $1,749.88 in interest.
How much should I pay to clear a card in 3 years?
On $5,000 at 22% it is $190.95 a month for 36 months, which costs $1,874.28 in interest. Regulation Z asks the card issuer to print an estimate of this kind on the statement: the monthly payment that clears the balance in 36 months.
Why does a small payment take so long?
Interest is charged on the whole balance, so a payment barely above the interest pays down little. On $5,000 at 22% the interest in the first month is $91.67. A payment of $100 takes 137 months and costs $8,678.06 in interest.
What does a statement say about minimum payments?
The statement shows how long the minimum payments would take and what they would cost in all. Regulation Z also asks for this warning: “If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance.”
Does the calculator include new purchases or fees?
No. It assumes that you add nothing to the balance and pay the same amount each month. New purchases, late fees and a change of rate would change the result, and the statement has the exact figures.
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