About

Paying only the minimum on a credit card balance of $5,000 at 22% APR can take over 27 years and cost more than $9,000 in interest alone. The monthly interest charge is computed as APR12 × B, where B is the outstanding balance. This tool generates a complete amortization schedule so you can see exactly how each dollar splits between principal and interest. It supports three strategies: minimum percentage payments, fixed monthly amounts, and target-date payoff. Approximation assumes no new charges, no fees, and a constant APR. Real statements include penalty APR escalation, grace periods, and compounding nuances not modeled here.

The minimum payment trap occurs because as the balance shrinks, the minimum payment also shrinks, asymptotically approaching the interest-only threshold. A fixed payment of even $50 above the minimum can cut payoff time in half. This calculator quantifies that difference. Pro tip: compare your result against the payoff disclosure on your actual statement (required under the CARD Act of 2009) to verify consistency.

Formulas

The monthly interest charge applied to the remaining balance uses the periodic rate derived from the annual percentage rate:

I_n = APR12 × 100 × B_n−1

Where I_n is the interest charged in month n, and B_n−1 is the balance carried from the previous month. The principal portion of each payment is P_n = M − I_n, and the new balance becomes B_n = B_n−1 − P_n.

For target-date payoff, the required fixed payment M is computed using the annuity formula:

M = B × r1 − (1 + r)⁻ⁿ

Where r = APR1200 is the monthly periodic rate, B is the current balance, and n is the desired number of months to payoff. The minimum payment each month is typically computed as max(B × minPct, minFloor), where minPct is usually 0.02 (2%) and minFloor is $25.

Reference Data

Card Type / Scenario	Typical APR Range	Common Min Payment Rule	Example Balance	Min-Only Payoff Time	Total Interest (Min-Only)
Student Card	15 - 20%	2% or $25	$1,500	≈9 yrs	≈$1,100
Cashback Card	18 - 24%	2% or $25	$3,000	≈15 yrs	≈$3,800
Travel Rewards	19 - 25%	2% or $35	$5,000	≈22 yrs	≈$7,500
Store / Retail Card	24 - 30%	2% or $25	$2,000	≈16 yrs	≈$4,200
Premium / Platinum	16 - 22%	1% + interest or $35	$10,000	≈25 yrs	≈$14,000
Secured Card	20 - 26%	2% or $25	$500	≈5 yrs	≈$300
Balance Transfer (0% intro, 12 mo)	0% → 18 - 24%	2% or $25	$7,000	Depends on post-intro APR	Varies significantly
Business Card	14 - 22%	2% or $50	$15,000	≈24 yrs	≈$16,000
Subprime / High-Risk	26 - 36%	2.5% or $35	$3,000	≈30+ yrs	≈$10,000+
Credit Union Card	10 - 16%	2% or $20	$4,000	≈13 yrs	≈$2,800
Average US Card (2024)	≈20.7%	2% or $25	$6,501	≈30 yrs	≈$12,000

Frequently Asked Questions

The minimum payment is typically 2% of the balance or a floor like $25. As the balance decreases, so does the minimum payment, meaning progressively less principal is retired each month. At 22% APR, a $5,000 balance generates about $92 in interest the first month. A 2% minimum payment is $100, leaving only $8 toward principal. This asymptotic decay means payoff stretches 20 - 30 years.

Most credit cards use a Daily Periodic Rate (DPR) = APR365 applied to the Average Daily Balance. This calculator simplifies to monthly compounding (APR ÷ 12), which is standard for payoff estimation. The difference between daily and monthly compounding at 22% over 12 months is less than 0.3% of total interest, making this approximation acceptable for planning.

The balance grows each month by the unpaid interest. This is called negative amortization. If your payment M < I_n, then B_n > B_n−1. The calculator detects this condition and warns you that the debt will never be paid off at that payment level.

No. This model assumes a static balance with no new charges added. Cash advances typically carry a higher APR (often 25 - 29%) and no grace period. If you continue using the card, actual payoff will exceed these projections. For accuracy, stop new charges or model each tranche separately.

On a $5,000 balance at 22% APR with a 2% minimum, adding $50 can cut payoff from roughly 27 years to about 5 years and save over $6,000 in interest. The marginal impact of extra dollars is highest in the early months when the balance and therefore interest charges are largest.

The Credit CARD Act of 2009 requires US issuers to print on each statement: (1) the time and total cost to pay off at minimum payments, and (2) the fixed payment needed to pay off in 36 months. This calculator replicates and extends that disclosure by letting you set any target timeframe and compare strategies side by side.