Credit Card Payoff Calculator

Understanding Credit Card Interest

This projection calculates interest monthly on your opening balance. Each month, it multiplies your balance by the monthly rate (APR% ÷ 1200) to determine the interest charge. Your payment first covers that interest, and only the remainder reduces your principal balance.

The Minimum Payment Trap

Minimum payments are designed to keep your account current, not to pay off your debt efficiently. Because the minimum is recalculated each month as a percentage of your declining balance, it shrinks over time. Early in the payoff period, almost your entire minimum payment goes to interest with very little reducing principal. This creates a cycle where payoff can take decades.

For example, a $5,000 balance at 22% APR with 2% minimum payments can take decades to pay off and cost many times the original balance in interest. Making a fixed $200 monthly payment instead reduces payoff to just 34 months with about $1,750 in interest (no fees).

Model Assumptions

• Fixed APR applied monthly (APR% ÷ 1200 per period) — no variable rates or promotional periods
• Interest compounded monthly on the outstanding balance
• Minimum payment = max(floor, percent of opening balance), or max(floor, interest + percent of opening principal), plus the entered fee
• No new purchases, cash advances, or balance transfers during payoff
• Only the entered recurring monthly fee; no annual, late, over-limit or other unentered fees
• Payments made at the end of each billing cycle
• Fixed payment stays constant throughout the payoff period
• Both scenarios capped at 600 months (~50 years) for display purposes