Credit Card Payoff Calculator

The Minimum Payment Trap

Credit card companies set minimum payments (usually 2% or $25) to maximize interest revenue. A $5,000 balance at 20% APR takes 27+ years to pay off with minimums, costing over $9,000 in interest!

How Credit Card Interest Works

• APR is divided by 365 to get daily rate
• Interest compounds daily on your balance
• New purchases may get grace period if balance is $0
• Cash advances start accruing interest immediately

Payoff Strategies

• Pay more than minimum: Even $50 extra helps significantly
• Debt avalanche: Target highest APR card first
• Balance transfer: Move to 0% intro APR card
• Personal loan: Often lower rate than credit cards

Balance Transfer Tips

• Look for 0% intro APR offers (12-21 months)
• Factor in transfer fees (3-5%)
• Have a plan to pay off before promo ends
• Dont use the card for new purchases

Breaking the Cycle

• Stop using the card while paying off
• Build a small emergency fund to avoid new charges
• Track spending to understand habits
• Switch to debit or cash for discretionary spending

Warning Signs

• Only able to make minimum payments
• Using one card to pay another
• Balance keeps growing despite payments
• Hidden cards from spouse/family