See how long a credit card balance takes to clear and what the interest really costs.
Credit cards compound interest monthly on the outstanding balance. A fixed monthly payment lets you forecast an exact payoff date using the NPER formula. Minimum payments are more insidious: because they're calculated as a percentage of the shrinking balance, each payment is smaller than the last — a $5,000 balance at 23% APR with a 2% minimum takes over 30 years to clear and costs more in interest than the original balance.
Monthly interest accrued
Monthly interest = Balance × (APR / 12)
Fixed payment payoff periods
n = −ln(1 − Balance × r / Payment) / ln(1 + r)
Minimum payments are typically 1–3% of the balance. At a 22% APR, roughly 22%/12 ≈ 1.83% of the balance accrues as interest each month. A 2% minimum payment leaves only 0.17% going to principal — the debt shrinks at a crawl while interest compounds.
Most US issuers use 1–2% of the balance plus any fees and interest, or a fixed floor (often $25–35), whichever is greater. Some cards use a flat 1% of balance plus the month's interest, which is equivalent to paying interest-only plus a tiny sliver of principal.
No — this calculator assumes no new purchases are added to the balance. In practice, continuing to use the card while paying it down is like filling a bucket while it drains.