Enter Values

$
Outstanding credit card balance
%
Annual percentage rate (e.g., 22 for 22%)
$
Fixed monthly payment amount
%
Minimum payment as % of balance (for comparison)
Payoff Formula
N = -ln(1 - B×r/P) / ln(1+r)
N = Months to payoff | B = Balance | r = Monthly rate (APR%/1200) | P = Payment
Ryan O'Connell, CFA
Calculator by Ryan O'Connell, CFA

Payoff Results

Fixed Payment Strategy

Months to Payoff --
Total Interest --
Total Cost --
Payoff Date --

Minimum Payment Only

Months to Payoff --
Total Interest --
Total Cost --

Your Savings

Interest Saved --
Time Saved --

Visual Comparison

Payment Schedule

Month Payment Principal Interest Balance

How Credit Card Payoff Works

Understanding Credit Card Interest

Credit card interest is calculated monthly on your outstanding balance. Each month, the card issuer 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.

Credit Card Payoff Formula
Months to Payoff: N = -ln(1 - B×r/P) / ln(1+r)
Monthly Rate: r = APR% / 1200
Where B = balance, P = monthly payment

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 only $1,750 in interest.

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(Balance × MinRate%, $25), recalculated each month
  • No new purchases, cash advances, or balance transfers during payoff
  • No fees or penalties (late fees, over-limit fees, annual 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
Credit CARD Act of 2009: Federal law requires credit card issuers to disclose on monthly statements how long it will take to pay off the balance making only minimum payments and the total cost. This calculator performs that same calculation.

Frequently Asked Questions

A credit card payoff calculator uses the standard amortization formula to determine how many months it will take to eliminate your balance. Each month, interest accrues on your outstanding balance at the monthly rate (APR% ÷ 1200). Your payment first covers that interest charge, and the remainder reduces your principal. The closed-form solution is N = -ln(1 - (B × r / P)) / ln(1 + r), where B is your balance, r is the monthly rate, and P is your payment amount.

Minimum payments are typically calculated as a percentage of your outstanding balance (commonly 2-3%), with a floor around $25. Because the minimum shrinks as your balance falls, you pay mostly interest in the early years and barely reduce principal. On a $5,000 balance at 22% APR with a 2% minimum payment rate, payoff can take decades and cost many times the original balance in interest.

Even a modest increase above the minimum dramatically reduces total interest. Using a $5,000 balance at 22% APR example: paying $200/month instead of the declining minimum cuts payoff time to about 34 months with roughly $1,750 in interest. Higher fixed payments attack the principal faster, reducing the base on which future interest accrues.

APR (Annual Percentage Rate) is the yearly cost of borrowing expressed as a percentage. For monthly calculations, the periodic rate is APR% ÷ 1200 (e.g., 22% APR = 0.01833 monthly rate). A higher APR means more of each payment goes to interest rather than principal, extending your payoff timeline. For example, raising the APR from 15% to 25% on a $5,000 balance with $200 monthly payments adds roughly 5 additional months to the payoff period and significantly increases total interest paid.

Most credit card issuers calculate the minimum payment as the greater of a percentage of your outstanding balance (typically 1-3%) or a fixed dollar floor (commonly $25-$35). The Credit CARD Act of 2009 requires issuers to disclose how long it will take to pay off the balance making only minimum payments. Check your cardholder agreement for your issuer's exact minimum payment formula.

The same payoff formula applies to any revolving credit line with a fixed interest rate, such as store credit cards or personal lines of credit. Enter your current balance, annual interest rate, intended monthly payment, and minimum payment percentage to get payoff projections. For installment loans with fixed terms, the loan amortization calculator may be more appropriate.
Disclaimer

This calculator is for educational purposes only. It assumes a fixed APR with no promotional periods, balance transfers, or new charges. Actual payoff timelines depend on your card issuer's specific terms, fees, and minimum payment formula. This tool should not be used as the sole basis for financial decisions. For educational purposes. Not financial advice. Market conventions simplified.

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