How Credit Card Interest Works
Credit card interest compounds monthly. Each month, interest is calculated on the remaining balance. When you make only the minimum payment, most of it goes toward interest rather than principal — dramatically extending your payoff timeline and total cost.
Payoff Time Examples (24% APR)
| Balance | Monthly Payment | Payoff Time | Total Interest |
|---|---|---|---|
| $1,000 | $50 | ~25 months | ~$225 |
| $3,000 | $100 | ~45 months | ~$1,450 |
| $5,000 | $150 | ~50 months | ~$2,400 |
| $10,000 | $250 | ~65 months | ~$6,200 |
Doubling your monthly payment can cut payoff time by more than half. Even an extra $50/month makes a significant difference. Always pay more than the minimum if possible.
Frequently Asked Questions
If your monthly payment is less than or equal to the monthly interest charge, your balance will never decrease — it will grow indefinitely. The calculator flags this immediately.
A 0% APR balance transfer card can dramatically reduce interest if you can pay off the balance before the promotional period ends, typically 12–21 months. Factor in any transfer fees (usually 3–5%).