How it works
Credit card interest compounds daily on the average daily balance, but the effect is close to a monthly rate of APR ÷ 12 for planning purposes. The engine projects a fixed monthly payment against your balance until zero, reporting payoff months and total interest paid. Minimum payments are engineered to stretch repayment for years — often a decade or more — because they barely exceed monthly interest. On the defaults — $8,500 balance, 24.99% APR, $300 fixed monthly payment — payoff takes 44 months and total interest is $4,479.51, for $12,979.51 paid in all. In month one, interest alone is roughly $177 ($8,500 × 0.2499/12), so $300 leaves about $123 toward principal; the balance falls slowly at first and accelerates as interest shrinks. Drop the payment toward a typical 2% minimum (~$170) and payoff stretches toward 25 years with interest exceeding the original balance. The Federal Reserve reports average credit card APRs near 20–25% in recent years (federalreserve.gov). The calculator assumes no new charges during payoff — every swipe resets the schedule. Pair with debt consolidation calculator if multiple cards qualify for a lower-rate loan, balance transfer calculator for 0% intro offers, and debt snowball vs avalanche when juggling several balances.
Formula
Each month: interest = balance × (APR/12)
balance = balance + interest − payment
Repeat until balance ≤ 0
Worked example — $8,500 · 24.99% APR · $300/month
Payoff time = 44 months
Total interest = $4,479.51
Total paid = $12,979.51
Tips
- Fix a payment above the minimum and treat it like a term loan — $300 on these defaults clears the card in under four years.
- Freeze the card during payoff; new charges extend the timeline more than extra interest does.
- Every extra $50 per month cuts both months and interest — run the payment slider to see the compounding effect.
- A 0% balance-transfer offer can eliminate the $4,479 interest line if you pay off within the intro period.
- Attack highest-APR cards first when holding multiple balances — avalanche order minimises total interest.
Frequently asked questions
- How long to pay off $8,500 at 24.99% paying $300/month?
- 44 months, with $4,479.51 of interest on top of the $8,500 balance — $12,979.51 total. The engine stops when the balance reaches zero at your fixed payment.
- Why does the minimum payment barely move the balance?
- Because most of it covers interest. On $8,500 at 24.99%, roughly $177 of a $200 payment is interest in month one, leaving only $23 toward principal. A fixed payment well above interest is the only way the balance visibly drops.
- How accurate is the monthly approximation versus daily compounding?
- Within a few dollars on typical balances. Cards compute daily interest but bill monthly; the monthly model used here matches industry payoff calculators closely enough for planning.
- Should I pay off the card or build an emergency fund first?
- Build a small $1,000–2,000 buffer while paying minimums, then redirect everything to the card. Above ~10% APR, debt payoff beats savings account yields; the buffer prevents one surprise bill from adding fresh charges.
- What if my payment does not cover monthly interest?
- The balance grows forever — the engine returns an error. Your payment must exceed the first month's interest (~$177 on the defaults) for payoff to be mathematically possible.