How the payoff is worked out
It follows the card month by month, the way a statement does:
- Interest for the month is the balance × APR ÷ 12, rounded to the cent.
- Interest and any new purchases are added to give the statement balance.
- Your payment comes off: the amount you choose, or the minimum payment for the comparison. The last payment is whatever is left.
It repeats until the balance reaches zero. The total interest and the total paid are sums of those monthly rows, the same figures as in the schedule and the CSV. In “Payment for a deadline” mode, it finds the smallest monthly payment, to the cent, that clears the card within the months you choose.
Worked example
A $5,000 balance at 22% APR, with no new purchases. The first month’s interest is $5,000 × 22% ÷ 12 = $91.67.
| Monthly payment | Time to clear | Total interest |
|---|---|---|
| Minimum only (interest + 1%, at least $25) | 18 years 11 months | $7,963.70 |
| $150 | 4 years 4 months | $2,798.09 |
| $200 | 2 years 10 months | $1,749.90 |
| $300 | 1 year 9 months | $1,021.61 |
To clear it in 36 months takes $190.96 a month, with $1,874.14 of interest. In 24 months it’s $259.40, and in 12 months it’s $467.98.
Why minimum payments take so long
A minimum payment is often worked out from the balance, so it shrinks as the balance shrinks. In the example, the first minimum is $142.59, but the last 56 payments, over 4 years and 8 months, are $25 or less, and it takes nearly 19 years in all. Keep paying the first minimum, $142.59, every month instead, and the card is clear in 4 years 9 months with $3,081.74 of interest.
A minimum of only a percentage of the balance, with no interest added, can be slower still. At 2% of the balance and 22% APR, the $5,000 takes more than 68 years. At 29.99% APR, 2% doesn’t even cover the interest, so the balance never goes down.
In the US, card statements must show how long paying only the minimum would take, and the payment that clears the balance in 36 months, as the Consumer Financial Protection Bureau explains. Those figures leave out new purchases. In the UK, the minimum must cover at least the interest, fees and charges plus 1% of the balance (FCA rule CONC 6.7.5).
Each issuer sets its own formula, so check your card agreement and set it under “How your minimum payment is worked out”.
Intro and balance transfer rates
With a 0% intro rate, all of each payment goes to the balance until the intro period ends. Suppose you move the $5,000 to a card at 0% for 15 months, with a transfer fee (3% in this example) added to the balance, making $5,150. At $300 a month it’s clear in 18 months, with $19.82 of interest after the intro rate ends. The same $300 a month on the original card at 22% takes 21 months and costs $1,021.61. To clear the transfer before the 0% ends, pay $343.34 a month.
Check the terms of any offer: the fee, how long the rate lasts, and the rate afterwards. Enter the fee as part of the balance.
If you keep using the card
New purchases add to the balance each month. Paying $200 a month on the $5,000 while spending $100 a month on the card takes 11 years 5 months instead of 2 years 10 months, and interest rises from $1,749.90 to $8,678.34. Of each $200, $100 covers the new purchases, which leaves $100 for the old balance and its interest.
More than one card?
Use the Debt Payoff Planner to see every card and loan together, with a payoff date for each, and to compare paying the highest rate first with paying the smallest balance first.
Assumptions and limitations
- Interest is charged monthly on the balance at the start of the month. Many issuers use the average daily balance and a daily rate instead, so your statements will differ by a little.
- The APR stays the same, apart from the intro period you enter. Penalty rates, fees, cash advances and rewards aren’t included.
- New purchases are added once a month, and a grace period on them isn’t modeled.
- Payments are made in full and on time, on the same day each month.
- Minimum payments use the formula you choose, rounded to the cent. Some issuers round up to the dollar.
- Your statement and card agreement have the exact figures for your card.
Questions
Why is my statement’s payoff time different?
Statements use your issuer’s exact minimum-payment formula and daily interest, and they assume no new purchases. Set the minimum-payment formula here to match your card agreement for a closer comparison.
Is it better to pay more than the minimum?
Any amount above the minimum goes to the balance and cuts the interest you pay, as the example shows. Paying at least the minimum on time avoids late fees on every card, including the ones you aren’t focusing on.
Does the calculator include a balance transfer fee?
Add the fee to the balance you enter. It’s then charged interest once the intro rate ends, just like the rest of the balance.