Find out how long a credit card balance will take to pay off at a payment you choose, or what to pay each month to clear it by a certain date.
A credit card charges interest each month on the balance you carry, at one twelfth of the yearly rate. If you pay only a small amount, most of it goes to interest and the balance falls very slowly. That is why a card balance can take years to clear. The calculator shows the effect: enter your balance, rate and payment, and it counts the months until the balance is gone and the total interest you pay on the way.
You can choose how much to pay each month and see how long it takes, or choose a target time and see what you need to pay. A typical minimum payment is interest plus 1% of the balance, or a percentage of it such as 2% to 3%, with a floor of about $15. The quick buttons fill in those amounts. Raising the payment even a little shortens the payoff dramatically and saves interest.
Pay more than the minimum, and pay as early in the month as you can, since interest is charged on the balance. Stop adding new charges while you pay the card down. If you have several cards, put extra money on the one with the highest rate. A balance transfer to a card with a lower or zero introductory rate can help, but watch for transfer fees. For several cards at once, use the Credit Cards Payoff Calculator.
If your payment is no more than the interest charged in a month, none of it reduces the balance, so the card can never be paid off. You need to pay more than the first month of interest, which the message shows.
Many issuers set the minimum at the interest plus 1% of the balance, or at 2% to 3% of the balance, with a lowest amount of around $15. Check your statement for your own rule.
The yearly rate is divided by twelve and applied to the balance each month. The payment is then taken off, and what is left becomes the balance for the next month. Real cards may charge interest daily, which can change the figures slightly.
No. It assumes you stop using the card and that no fees are added. Any new charges would raise your balance and lengthen the payoff.
Pay more than the minimum, make the payment earlier in the month, and avoid new charges. Try different amounts in the calculator to see how much time and interest each extra payment saves.
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