Part of our guide to How to Pay Off Debt Faster
Card interest is charged monthly on whatever is left, so the length of the payoff and the cost of it are the same problem. This shows both.
How many months a balance takes to clear at a fixed payment, and what the interest costs over that time. If the payment is too small to cover the monthly interest, it says so directly rather than returning a misleadingly large number of months.
How the calculation works
Each month, interest is added and the payment is subtracted:
interest = balance × (APR / 12)
balance = balance + interest − paymentThe calculator repeats this until the balance reaches zero, with the final payment trimmed to whatever is actually owed rather than overshooting.
The important case is the one that never terminates. If payment ≤ balance × APR / 12, the balance grows every month no matter how long you pay. Rather than looping forever or returning a nonsense figure, the calculator detects this and reports the monthly interest charge — the number your payment has to exceed before any progress happens at all.
How to read the result
Total interest is the number that changes behaviour. The months figure feels abstract; the interest figure is money you hand over for nothing.
Raise the payment and re-run it. The relationship is not proportional — a modest increase in payment often cuts total interest by far more, because it shortens the period over which interest accrues at all.
Minimum payments are designed to be slow. They are typically set as a small percentage of the balance, which means they fall as the balance falls, stretching the payoff out. Paying a fixed amount rather than the shrinking minimum is one of the largest improvements available, and it costs nothing extra in month one.
Important considerations
This assumes you stop adding to the card. New purchases invalidate the arithmetic entirely.
Cash advances usually carry a higher rate and often no grace period, so they are not covered by a single blended APR.
A promotional 0% rate changes the picture while it lasts, and changes it back sharply when it ends. If you are considering a transfer, run the numbers in the balance-transfer maths first — the fee is charged up front and is not always worth it.
For why the interest figure comes out higher than people expect, see how credit card interest is actually calculated — the daily periodic rate and compounding are the reason.
Related tools and reading
- How credit card interest is actually calculated
- Balance transfer cards — the maths
- How to pay off debt faster
- Compound interest calculator
- 50/30/20 budget calculator
This is general information, not financial advice — see our disclaimer.
Frequently asked questions
Why does it say my payment never pays it off?
Because the payment is smaller than the interest charged that month, so the balance rises rather than falls. No length of time fixes this — only a larger payment does.
How much more than the minimum should I pay?
Any amount above the interest charge reduces the balance, and every extra dollar goes straight to principal. Raise the payment in the calculator and watch the total interest fall much faster than the payment rises.
Does this assume I stop using the card?
Yes. New purchases add to the balance and reset the arithmetic, which is why paying down a card you are still spending on rarely works.
Why is the total interest so much higher than the APR suggests?
Because interest is charged every month on whatever remains. A long payoff means paying interest on the same debt many times over.
Which card should I clear first if I have several?
Highest interest rate first costs the least money. Smallest balance first clears a card sooner and some people find that easier to sustain. Both work; abandoning the plan does not.
Sources
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