Pay a bit more, finish sooner
The same card with a little more each month. Even a small increase takes months off and saves interest.
| Monthly payment | Time to pay off | Interest saved |
|---|---|---|
| $200.00You | 2 years 10 months | — |
| $225.00 | 2 years 5 months | $269.19 |
| $250.00 | 2 years 2 months | $464.19 |
| $300.00 | 1 year 9 months | $728.29 |
| $400.00 | 1 year 3 months | $1,018.28 |
How to calculate credit card payoff
Each month your card adds interest to what you owe, then your payment comes off. Interest is the balance times the yearly rate, divided by 12. The next month's interest is a little smaller because the balance is smaller.
Here it is with your numbers:
- Pay $200.00 a month on $5,000.00 at 22% APR.
- Interest for month 1: $5,000.00 × 22% ÷ 12 = $91.67.
- Take the interest out of your payment: $200.00 − $91.67 = $108.33 goes to the balance.
- New balance: $5,000.00 − $108.33 = $4,891.67.
- Repeat every month. The balance shrinks, so the interest shrinks and more of each payment goes to the balance. After 34 payments it is paid off, and the last payment is only $149.90.
- Total paid: 33 × $200.00 + $149.90 = $6,749.90.
- Interest: $6,749.90 − $5,000.00 = $1,749.90.
It means every $1.00 you owe costs you $1.35 by the time it's paid off.
Source Microsoft Support · NPER function ↗Microsoft Support · PMT function ↗CFPB · Regulation Z, Appendix M1 (repayment disclosures) ↗
How credit card interest works
Many card companies work out interest daily, on your average daily balance. This calculator uses the monthly version, which is how the CFPB lets card companies estimate payoff time on your statement. The two give very close answers, but your own statement is the final word.
Source CFPB · How does my credit card company calculate the amount of interest I owe? ↗
If you do not pay your balance in full by the due date, you lose the grace period and are charged interest on what is left.
Source CFPB · What is a grace period for a credit card? ↗
What your statement already tells you
By law, your credit card statement shows how long it would take to pay off the balance with only minimum payments, and the payment needed to be done in 36 months. Choose "I know my deadline" above and enter 36 to check that figure.
Source CFPB · 12 CFR 1026.7, periodic statement (repayment disclosures) ↗
FAQs
How long will it take to pay off my credit card?
It depends on three things: what you owe, your interest rate and what you pay each month. Enter them above. Each month the interest is added and your payment comes off, which is the same maths as the NPER function in Excel.
How to pay off credit card debt?
The CFPB advises that you should try to pay more than the minimum. The bigger your payment, the sooner it is paid off and the less interest you pay. The "Pay a bit more" table above shows what an extra $25, $50, $100 or $200 a month would do.
Source CFPB · 12 CFR 1026.7, periodic statement (repayment disclosures) ↗
How to pay off credit card debt fast?
Interest builds on what you still owe, so every dollar you pay down early cuts the interest charged after it. Use "I know my deadline" above to see the monthly payment that clears your balance by the date you choose.
Source CFPB · How does my credit card company calculate the amount of interest I owe? ↗
Should I pay off my credit card in full each month?
The CFPB says you may not be charged interest if you pay your balance in full by the due date. If you do not, you are charged interest on the unpaid part. Check your card agreement for how this works on yours.
Sources
- Microsoft Support: NPER function
- Microsoft Support: PMT function
- CFPB: Regulation Z, Appendix M1 (repayment disclosures)
- CFPB: How does my credit card company calculate the amount of interest I owe?
- CFPB: What is a grace period for a credit card?
- CFPB: 12 CFR 1026.7, periodic statement (repayment disclosures)