What this calculator does
Credit card interest compounds monthly against a balance that only falls by whatever is left after interest is charged. That is why a payment slightly above the interest charge can take a decade to clear a modest balance, and why a payment at or below it never clears at all.
This calculator finds the point where a fixed payment finally reduces the balance to zero, and shows what the interest costs on the way. If the payment is too small to make progress, it says so explicitly rather than returning a misleading number.
The formula
Each month, interest is added at the monthly rate, then the payment is applied. Solving for the month at which the balance reaches zero gives a logarithmic expression. If the payment does not exceed the first month’s interest, there is no solution: the balance grows forever.
| Term | Meaning |
|---|---|
| B | The balance currently owing. |
| i | Monthly rate: the annual purchase rate ÷ 12 ÷ 100. |
| PMT | The fixed amount paid each month. |
| n | The number of months until the balance reaches zero. |
The inputs explained
| Field | What to enter |
|---|---|
| Balance owing ($) | The current balance on the card. |
| Annual rate (APR) (%) | The annual purchase rate on the card. Cash advance rates are usually higher and are charged separately. |
| Payment per month ($) | The fixed amount you will pay each month. It must exceed the first month’s interest for the balance to fall. |
When to use it
Seeing what the minimum payment really costs
Minimum payments are typically set near 2% of the balance, which is only slightly above the interest charge. Enter that amount and the payoff time is frequently measured in decades.
Choosing a payment that clears the card in a set time
Adjust the payment until the payoff time lands where you want it. Twelve, eighteen and twenty-four months are useful targets to test.
Evaluating a balance transfer
Run the balance at your current rate, then at the promotional rate for the promotional period. The interest saved is what the transfer is worth, and it needs to exceed any transfer fee.
Prioritising between debts
Run each card separately. Directing extra payments at the highest rate first minimises total interest, though clearing the smallest balance first can help with motivation.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
Clearing a $6,000 balance at 19.99%
A $6,000 balance on a typical credit card rate, at different fixed monthly payments.
| Monthly payment | Time to clear | Total interest | Total paid |
|---|---|---|---|
| $120 | 108.3 months (9.0 years) | $6,996.20 | $12,996.20 |
| $150 | 66.4 months (5.5 years) | $3,965.55 | $9,965.55 |
| $200 | 41.9 months (3.5 years) | $2,385.00 | $8,385.00 |
| $250 | 30.9 months (2.6 years) | $1,724.85 | $7,724.85 |
| $400 | 17.4 months (1.5 years) | $961.17 | $6,961.17 |
| $600 | 11.0 months (0.9 years) | $617.77 | $6,617.77 |
How the interest rate changes the outcome
The same balance and payment, across the range of rates cards actually charge.
| Annual rate | Time to clear | Total interest | Total paid |
|---|---|---|---|
| 0% | N/A months (N/A years) | N/A | N/A |
| 8% | 26.2 months (2.2 years) | $560.02 | $6,560.02 |
| 12% | 27.6 months (2.3 years) | $895.17 | $6,895.17 |
| 16% | 29.1 months (2.4 years) | $1,279.27 | $7,279.27 |
| 20% | 30.9 months (2.6 years) | $1,726.06 | $7,726.06 |
| 24% | 33.0 months (2.8 years) | $2,255.55 | $8,255.55 |
Different balances at a fixed $300 a month
What a consistent $300 monthly payment achieves against various balances.
| Balance owing | Time to clear | Total interest | Interest in the first month |
|---|---|---|---|
| $1,000 | 3.5 months (0.3 years) | $37.38 | $16.66 |
| $2,500 | 9.0 months (0.8 years) | $213.82 | $41.65 |
| $5,000 | 19.7 months (1.6 years) | $905.72 | $83.29 |
| $10,000 | 49.0 months (4.1 years) | $4,714.00 | $166.58 |
| $15,000 | 108.3 months (9.0 years) | $17,490.49 | $249.87 |
Questions
Why does it sometimes say the balance is never paid off?
Because the payment is less than or equal to the interest charged each month, so the balance grows rather than falls. The calculator shows the monthly interest figure so you know what the payment must exceed.
Does this assume I stop using the card?
Yes. Any new purchases add to the balance and extend the payoff. The projection only holds if the card is not used further.
Are minimum payments included?
No: you enter a fixed payment. Real minimum payments are usually a percentage of the balance, so they fall as the balance falls, which stretches the payoff even longer than a fixed payment at the same starting level.
Does the interest-free period apply?
Only if you clear the statement balance in full each month. Once a balance is carried, most cards charge interest from the purchase date and the interest-free period no longer applies.
Is a balance transfer worth it?
Usually, if you can clear most of the balance within the promotional window and the transfer fee is smaller than the interest saved. Run both scenarios here and compare the total interest.
To check your overall debt load against income, use the debt-to-income calculator. For an instalment loan instead, see the loan payment calculator.