Credit Card Payoff Calculator

Computes payoff timeline and total interest for a credit card balance given APR and a chosen monthly payment. Two modes: fixed payment (months until zero), or fixed timeframe (required monthly payment).

Monthly interest is APR divided by 12, applied to the prior balance. The standard amortization formula yields months = log(P/(P − rB)) / log(1 + r), where r is monthly rate.

Credit card interest compounds monthly on the average daily balance during each statement period. The displayed APR is a nominal annual rate; the monthly rate is APR/12, applied to whatever principal is outstanding at the start of each cycle. Because payments are typically applied to interest first (per CARD Act 2009 rules, beyond the minimum payment), early progress on principal feels slow even with on-time payments. The payoff formula derives from the standard amortizing-loan equation, solved for time rather than payment.

A worked example: a $5,000 balance at 24% APR with $100 monthly payments. Monthly rate is 0.02 (2%). First month's interest is $100 of the $5,000 × 2% = $100, exactly equal to the payment, meaning principal does not decrease at all. The minimum-payment trap is real: at this APR, $100/month would never pay off the balance, since interest accrues at the same rate as the payment. Increasing to $200/month makes the first month's interest $100, principal reduction $100, balance $4,900. Total payoff takes 32 months and accrues $1,398 in interest, on top of the original $5,000. At $400/month, payoff is 14 months with $560 interest. Doubling the payment more than halves the total cost.

Limitations are mostly about real-world deviations from the model. The calculator assumes a fixed APR, no new charges, and no fee events (late fees, over-limit fees, foreign transaction fees). Variable APRs (most US cards are variable, tied to prime rate) drift over time. Promotional 0% intro APRs reset to a high standard rate at a fixed date, after which interest applies retroactively for purchases made during the promo window unless paid in full. Balance transfer fees (3-5% of the transferred amount, typically) are not included; these can erase the savings of a 0% transfer for short payoff horizons.

The meaningful policy lesson is that minimum payments on high-APR cards are an arithmetic trap. A 24% APR balance at the typical 2% minimum-payment rule barely outpaces interest and can take 30+ years to retire. Paying any fixed amount above the minimum dramatically compresses the timeline. The single most useful intervention is to set a fixed dollar amount well above the minimum and treat it as immutable until payoff.