How credit card interest works
Credit cards charge interest on your balance using a daily periodic rate — your APR divided by 365 — and add it to your balance every month. Because interest is charged on last month's interest too, balances grow quickly when you only make small payments. The calculator uses the standard monthly approximation, which is within a few dollars of what most issuers actually charge.
Months to payoff = −ln(1 − r × B ÷ P) ÷ ln(1 + r) where r = APR ÷ 12, B = balance, P = payment
Example: a $6,000 balance at 22% APR costs about $110 in interest in the first month ($6,000 × 0.22 ÷ 12). If you pay $250, only $140 goes toward the balance.
How much faster do bigger payments get you out of debt?
For a $6,000 balance at 22% APR:
| Monthly payment | Time to pay off | Total interest |
|---|---|---|
| Minimum only (1% + interest, min $25) | 20 yrs 9 mo | $9,933 |
| $150 | 6 yrs 1 mo | $4,913 |
| $200 | 3 yrs 8 mo | $2,791 |
| $300 | 2 yrs 2 mo | $1,543 |
| $500 | 1 yrs 2 mo | $839 |
Going from $150 to $300 a month cuts the payoff time by more than half and saves well over $1,500 in interest. Every extra dollar goes straight to principal.
The minimum payment trap
Most issuers set the minimum at 1%–3% of the balance plus that month's interest, often with a floor of $25–$40. As your balance falls, so does the minimum — which is why paying only the minimum can take a decade or more. Since the Credit CARD Act of 2009, your statement must show how long payoff would take at the minimum payment and the monthly amount needed to pay it off in three years. The simplest fix is to pick a fixed payment and keep paying that amount even as the required minimum drops.
Strategies to pay off credit card debt faster
1. Avalanche method (saves the most money)
Pay the minimum on every card, then put all extra money toward the card with the highest APR. When it's paid off, roll that payment into the next-highest rate. This minimizes total interest.
2. Snowball method (builds momentum)
Put extra money toward the smallest balance first. You pay slightly more interest than with the avalanche, but quick wins help many people stick with the plan.
3. 0% balance transfer
Balance transfer cards often offer 0% APR for 12–21 months, usually with a 3%–5% transfer fee. On a $6,000 balance, a 3% fee is $180 — far less than a year of interest at 22%. Divide the balance by the number of promo months to find the payment that clears it before the rate resets.
4. Debt consolidation loan
A fixed-rate personal loan at a lower APR turns revolving debt into one predictable payment with a set end date. It only helps if you avoid running the cards back up.
5. Ask for a lower rate
If you've paid on time, call your issuer and ask for a lower APR. Even a few points makes a measurable difference — try it in the calculator.
Will paying off my card help my credit score?
Usually, yes. Credit utilization — your balances divided by your credit limits — is a major factor in FICO and VantageScore models. Keeping utilization below 30% (and ideally under 10%) tends to help. Closing a card after paying it off can raise utilization by removing its limit, so it's often better to keep a no-fee card open.
Frequently asked questions
How long will it take to pay off $5,000 on a credit card?
At 22% APR, paying $200 a month takes about 34 months and roughly $1,750 in interest. Paying $300 a month takes about 21 months and around $1,020 in interest.
How is credit card interest calculated?
Issuers divide your APR by 365 to get a daily rate, apply it to your average daily balance, and add the interest to your balance at the end of each billing cycle. The calculator uses APR ÷ 12 per month, which gives nearly identical results.
What payment do I need to pay off my card in 12 months?
Choose "Be debt-free by a date", enter 12 months, and the calculator shows the fixed monthly payment. For $6,000 at 22% it is about $562 a month.
Is it better to pay off one card or spread payments?
Pay the minimum on all cards and put every extra dollar on one card — either the highest APR (avalanche, cheapest) or the smallest balance (snowball, most motivating).
Does paying twice a month help?
Slightly. Because interest accrues daily, paying half your payment every two weeks lowers your average daily balance, saving a little interest, and makes it easier to keep utilization low when your statement is reported.