How the credit card payoff calculator works
Card issuers charge interest on your balance every billing cycle. The calculator simulates each month: it adds one month of interest (APR ÷ 12) to the balance, subtracts your payment, and repeats until the balance reaches zero. It assumes you stop adding new purchases, which is the first step of any payoff plan. If your payment is smaller than the monthly interest, the balance will never shrink, and the calculator warns you.
The formula
Months to payoff n = −ln(1 − r × B / P) ÷ ln(1 + r), where B is the balance, P the monthly payment and r the monthly rate. To pay off in a set number of months, the required payment uses the standard loan formula P = B × r / (1 − (1 + r)−n).
Example
A $5,000 balance at 18% APR with a $200 monthly payment takes 32 months to pay off and costs about $1,314 in interest. Raising the payment to $250 clears it in about two years and saves several hundred dollars.
Strategies that work
If you have several cards, the avalanche method pays extra on the highest-APR card first and saves the most interest. The snowball method pays the smallest balance first for quick wins. A 0% balance-transfer card or a lower-rate consolidation loan can also help, but watch transfer fees and the date the promotional rate ends.
Frequently asked questions
Why does paying only the minimum take so long?
Minimum payments are often just interest plus about 1% of the balance, so very little goes to principal. Paying a fixed amount above the minimum shortens payoff dramatically.
Does this include new purchases?
No. The calculator assumes no new charges. If you keep using the card, payoff will take longer.
Is card interest really compounded daily?
Most issuers use a daily periodic rate on your average daily balance. Using APR ÷ 12 monthly gives a very close estimate for planning.
Should I pay off cards or save first?
Many people keep a small emergency fund first, then attack high-interest card debt, since few investments reliably earn more than a card APR.
Results are estimates for educational purposes only and are not financial, tax, legal or medical advice. See our disclaimer. Last reviewed 2026-10-22.