Credit Card Payoff Calculator
A credit card payoff calculation helps estimate how long a balance may take to clear and how much interest could be paid when a fixed monthly payment is used. It can also show why increasing the payment can make a major difference when interest rates are high.
Quick Answer
For a simplified fixed-payment model, the monthly rate is r = APR Γ· 12. The number of months can be estimated with N = -ln(1 - rB/P) Γ· ln(1+r), where B is the balance and P is the monthly payment. This assumes a constant rate and payment and no new purchases or fees.
Inputs Explained
Current balance: The amount owed. APR: The annual percentage rate. Monthly payment: The amount you plan to pay each month. Some calculators also include fees or additional purchases, which can materially change the result.
How to Use the Calculator
- Enter the current card balance.
- Enter the card's APR.
- Enter the planned monthly payment.
- Check the estimated payoff time, total payments, and total interest.
Worked Examples
Example 1: A $3,000 balance at 24% APR with a $150 fixed monthly payment has a monthly rate of about 2%. Under a simplified model, it takes roughly 25 months to repay, with total payments around $3,730.
Example 2: Keeping the same $3,000 balance and 24% APR but paying $250 per month can reduce the payoff period to about 15 months, with substantially less interest.
Example 3: A $5,000 balance at 18% APR with a $200 monthly payment takes about 32 months under the same simplified assumptions. Paying more each month reduces both time and interest.
Payment Comparison
| Balance | APR | Monthly Payment | Approx. Payoff Time |
|---|---|---|---|
| $3,000 | 24% | $150 | ~25 months |
| $3,000 | 24% | $250 | ~15 months |
| $5,000 | 18% | $200 | ~32 months |
Why Minimum Payments Can Be Costly
A minimum payment may be calculated using a card issuer's specific rules and can be relatively small compared with the balance. When the APR is high, a large part of a small payment may go toward interest, leaving less to reduce principal. New purchases can also extend the payoff period.
Common Mistakes
- Using the APR as if it were the monthly rate.
- Assuming the card balance will not change because of new purchases.
- Ignoring annual fees, late fees, promotional rates, or penalty rates.
- Assuming the calculator's simplified result exactly matches a card issuer's statement.