Credit Card Payoff Calculator
Minimum payment to cover interest: $79.12
Payoff Tips
- •Always pay more than the minimum payment
- •Consider balance transfer to a lower rate
- •Stop using the card while paying it off
- •Use the avalanche or snowball method
Understanding Credit Card Debt
Why Credit Card Debt is Expensive
Credit cards typically carry high interest rates (15-25% APR), making them one of the most expensive forms of debt. The minimum payment trap can keep you in debt for decades while you pay many times the original balance in interest.
The Minimum Payment Trap
A $5,000 balance at 18.99% APR with minimum payments (2% of balance) would take over 30 years to pay off and cost over $12,000 in interest alone. That is more than double the original debt!
Debt Payoff Strategies
Avalanche Method
Pay off highest interest rate debt first. Mathematically optimal - saves the most money in interest charges over time.
Snowball Method
Pay off smallest balance first. Provides quick wins and psychological motivation to keep going despite potentially higher interest costs.
How Much Should You Pay?
Financial experts recommend paying at least 2-3 times the minimum payment, or better yet, as much as you can reasonably afford. Use our calculator to see how different payment amounts affect your payoff timeline.
| Monthly Payment | Time to Payoff | Total Interest |
|---|---|---|
| $100 (minimum) | 7+ years | $3,500+ |
| $200 | 2.5 years | $1,200 |
| $300 | 1.5 years | $700 |
| $500 | 11 months | $400 |
*Based on $5,000 balance at 18.99% APR
Balance Transfer Options
Many credit card companies offer 0% APR balance transfer promotions for 12-21 months. This can save significant interest if you can pay off the balance during the promotional period. Watch out for:
- Transfer fees: Usually 3-5% of the transferred balance
- Deferred interest: Some cards charge backdated interest if not paid in full
- Post-promo rates: Rate may jump to 20%+ after the promo ends
- Credit score impact: Opening new cards can temporarily lower your score
Key Takeaways
- • Every extra dollar you pay goes directly to principal
- • Paying twice the minimum can cut payoff time by 75%
- • Consider a debt consolidation loan at a lower rate
- • Build an emergency fund to avoid future credit card debt
Frequently Asked Questions
How long will it take to pay off my credit card?
It depends on your balance, interest rate, and monthly payment. Minimum payments can take 15-30+ years to pay off a balance. For example, a $5,000 balance at 18% APR with minimum payments takes over 20 years. Paying $200/month instead reduces that to about 2.5 years. Use our calculator to see your specific payoff timeline.
Should I use the debt avalanche or snowball method?
The avalanche method (paying highest interest first) saves the most money mathematically. The snowball method (paying smallest balance first) provides quicker wins and psychological motivation. Choose avalanche if you're motivated by savings, or snowball if you need early victories to stay committed. Both work if you stick with them.
How much should I pay on my credit card each month?
Pay as much as you can afford beyond the minimum. Financial experts recommend at least 2-3 times the minimum payment. Even an extra $50-100/month dramatically reduces your payoff time and interest costs. If possible, pay the full balance monthly to avoid interest charges entirely.
Is a balance transfer card worth it?
Balance transfer cards offering 0% APR for 12-21 months can save significant interest if you can pay off the balance during the promotional period. Watch for 3-5% transfer fees and have a plan to pay off before the promo ends (rates often jump to 20%+ afterward). They work best for those disciplined enough not to add new charges.