How it’s calculated
Each month the card charges interest at APR ÷ 12 on the balance, then your payment is subtracted. We repeat this month by month until the balance reaches zero. If your payment does not exceed the monthly interest, the debt never shrinks.
Example: $3,000 at 18% APR with $100 a month: i = 0.015, months = −ln(1 − 0.015 × 3,000 ÷ 100) ÷ ln(1.015) = −ln(0.55) ÷ 0.014889 = 40.2, so 41 months, with about $1,015 of interest.
Issuers compute interest on the average daily balance, so real totals differ slightly. Your statement also shows how long minimum payments would take.
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, higher amount clears the debt much faster.
Which card should I pay off first?
Paying the highest-APR card first (avalanche) minimizes interest; paying the smallest balance first (snowball) gives quicker wins. Always make at least the minimum on every card.
Would a balance transfer help?
A 0% promotional rate can save interest if you clear the balance before it ends, but watch for transfer fees (often 3–5%) and the rate afterward.
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Sources
- What does the "pay off in three years" box on my credit card bill mean? — U.S. Consumer Financial Protection Bureau
- Contemporary Mathematics, §6.10 Credit Cards — OpenStax
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
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