Credit card payoff calculator

The issuer minimum formula is typically 1% of balance + monthly interest + fees, with a $25 dollar floor. Some issuers use 2%. This is essentially interest-only plus a tiny principal slice. The 2009 CARD Act required issuers to disclose how long minimum-only payoff takes — open your statement and look at the "Minimum Payment Warning" box. The number is usually shocking.

The math:on $5,000 at 22.5% APR, the first-month minimum is about $144 ($50 from 1% of balance + $94 interest). But as you pay down the balance, the minimum drops too — by year 5 you're paying ~$70/mo and most of that is still interest. Total payoff stretches past 18 years, with $5,500+ in interest. The minimum is designed to keep you paying the maximum interest the law allows.

The fix is simple and shown above: pay a fixeddollar amount, even if it's only $50 more than today's minimum. Because the issuer minimum drops over time, any fixed amount above today's minimum captures more principal as the months roll on. Often a $50 increase saves $1,000+ in lifetime interest.

If you have multiple cards, the same math applies per-card but two ordering strategies are commonly cited: avalanche (pay minimums on all cards, throw everything else at the highest-APR card first — mathematically optimal) and snowball (pay minimums on all, throw everything at the smallest-balance card first — psychologically motivating). Avalanche saves more dollars; snowball saves more sanity. Both beat paying minimum on everything.

0% balance transferscan save substantial interest if you can pay off the balance during the promo window (typically 12-21 months). Watch the transfer fee (3-5%) and the regular-rate-after-promo — if you don't pay it off, the new APR can be worse than the old one.

What we deliberately don't model: compound fees (late fees, over-limit fees), promotional APR cliffs (intro-rate expiry that backdates interest), variable-rate adjustments, balance additions (new charges while paying down — this calculator assumes you stop charging). The minimum-payment number assumes you only make the minimum and add nothing new. If you keep charging, payoff never happens.

If your monthly payment can't cover monthly interest: the balance grows each month ("negative amortization"). Common with cards near the maxed-out limit — the credit-utilization hit also tanks your score, making refinancing harder. Priority one is getting payment above the interest line; second priority is climbing above the issuer minimum.

Bigger picture:credit card debt at 20%+ APR is financially the highest-priority debt to eliminate. Even more than 401(k) match capture (that's 50% return; this is 22% guaranteed cost-avoidance). If you're carrying high-rate card debt, the 401(k)-match math from our other calculator still wins on principle (free money), but everything beyond the match should fund this payoff first.