Credit Card Interest & Minimum Payment Calculator

• Shows the time to pay off, total interest and first month's interest when you pay only the minimum, in the style of the warning box on a card statement.
• Builds the minimum the way many issuers do: a percentage of the balance plus that month's interest, with a dollar floor.
• Compares three ways of counting interest: APR divided by 12, the daily rate over the billing cycle, and daily compounding.
• Charts the balance falling and the split of each year's payments between principal and interest, and tables what an extra amount each month would save.

How to use this calculator

Enter the card balance and the purchase APR from your statement. Then describe the minimum. Many issuers charge 1% of the balance plus the month's interest and fees, with a floor of $25 to $40, and that is the default here. If your card uses a flat percentage that already includes interest (often 2% to 4%), choose that rule under Advanced. The extra field sets how much more than the minimum you could add each month; Advanced also lets you test one fixed payment, change the interest method and set the length of the billing cycle.

This is different from the Credit Card Payoff Calculator. That tool starts from a goal, such as being debt-free in 24 months, and finds the payment that gets you there. This one starts from what the card asks you to pay and shows what that costs. Use this one to see the minimum payment trap, then the payoff calculator to plan your way out.

How the minimum payment is built

There is no single legal formula. Each issuer sets its own and describes it in the cardholder agreement. The common pattern is the larger of two numbers:

Minimum = the greater of  (dollar floor)  or  (percent of balance + interest + fees)

With the percentage at 1%, the part that reduces your balance is only that 1% of the balance, because the rest is the interest you owe for the month. Some issuers use a higher percentage with interest included, so a 2% minimum on a card charging 1.83% a month leaves only a sliver for principal. When the balance is small enough that the percentage falls below the floor, the floor applies, and the last payment is whatever remains.

Federal rules require every statement to show a minimum payment warning: how long it would take to pay off the balance paying only the minimum, the total cost, and the monthly payment that would clear the balance in 36 months. This calculator reproduces those three numbers for your inputs and lets you change them.

How card interest is calculated

Card interest accrues daily. The issuer divides the APR by 365 to get a daily periodic rate and applies it to each day's balance; the average daily balance multiplied by the daily rate and the days in the cycle gives the cycle's interest. Some cards also add each day's interest to the balance, which is daily compounding.

Daily rate     = APR / 365
Cycle interest = average daily balance x daily rate x days in cycle
Compounded     = balance x ((1 + APR/365)^days - 1)

For the default card, the first month's interest is $90.41 using the daily rate over a 30-day cycle, $91.67 using the shortcut APR divided by 12, and $91.21 with daily compounding. The differences are small in a single month. Over the life of a long payoff they add up: total interest is $7,982 with the daily rate, $8,100 with APR divided by 12 and $8,056 with daily compounding. Your statement shows which method your card uses.

A worked example

Take a $5,000 balance at 22% APR with a minimum of 1% plus interest and a $25 floor. In month one the interest is $90.41 and the minimum is $140.41, so only $50.00 reduces the balance. Paying only the minimum, the card takes 19 years and 2 months to pay off and costs $7,982 in interest. You pay $12,982 in total to settle a $5,000 balance, and interest is 61% of every dollar you hand over.

The same card paid at $191 a month clears in 36 months. Adding a fixed $50 to the minimum each month brings the payoff to 5 years, 7 months and saves $5,191. Adding $100 saves $6,239, and $200 saves $6,971.

The rate matters as much as the habit. At 15% APR the minimum-only payoff costs $5,303; at 28% it costs $10,319. A larger balance of $10,000 costs $17,023 in interest over 24 years and 11 months.

Why a fixed extra amount works

The minimum is built from the balance, so it falls as the balance falls. That is what stretches the payoff over so many years: as you get closer to zero, the required payment shrinks and so does the amount going to principal. A fixed extra payment does not shrink. Every month it removes the same amount of principal and, because the balance drops faster, the interest charged drops faster too.

The table in the results shows this for several extra amounts. It also shows why the first amount you add is worth the most per dollar: the early months carry the biggest balances and the highest interest. A different approach is to keep paying what your first minimum was. On the default card that is about $140 a month, which is the minimum when the balance was highest.

Assumptions and limitations

• No new purchases. The model assumes you stop using the card. New charges, cash advances and balance transfers are not included.
• No fees. Late fees, annual fees and over-limit charges are left out, though many issuers add fees to the minimum.
• One fixed APR. Variable rates move with the prime rate, and penalty or promotional rates are not modelled.
• Payment at cycle end. The payment is assumed to post at the end of each cycle, so the average daily balance equals the balance. Paying earlier in the cycle lowers interest slightly.
• Your issuer's formula controls. The default 1% plus interest with a $25 floor is a common pattern, not a rule. Check your cardholder agreement.
• Estimate only. The statement's own warning box uses your card's exact terms and is the figure to rely on.

Common mistakes

Treating the minimum as a plan. It is the least the issuer will accept without a late fee, and it is built to keep the balance outstanding for years.

Dividing APR by 12 and calling it exact. It is a good estimate. The true figure depends on the days in each cycle and whether interest compounds daily.

Letting the payment fall as the balance falls. If you pay only the minimum, the payment drops each month. Fix the payment at the starting level to shorten the payoff.

Ignoring the rate. A balance transfer or consolidation loan at a lower rate can save more than a small extra payment. Compare the options in the related calculators.

Frequently asked questions