The one number card issuers hope you never calculate
Credit card interest compounds against you monthly at rates that dwarf every other consumer debt. At 22% APR, a $5,000 balance accrues about $92 in interest in the first month. Pay $200 and only $108 actually reduces the debt. That's why balances feel immovable: more than 40% of a typical payment can be eaten by interest before a single dollar touches principal.
The calculator runs your balance forward month by month: each month it adds interest (APR ÷ 12 × balance), subtracts your payment, and repeats until the balance hits zero.
The minimum payment trap, quantified
Issuers typically set minimums at 1–2% of the balance plus that month's interest. Because the minimum shrinks as the balance falls, the payoff timeline stretches absurdly:
| Strategy on $5,000 at 22% | Payoff time | Total interest |
|---|---|---|
| Shrinking minimum (interest + 1%) | 20+ years | ~$7,700 |
| Fixed $200/month | 2 yr 9 mo | ~$1,600 |
| Fixed $300/month | 1 yr 8 mo | ~$950 |
The single most powerful move costs nothing: convert your shrinking minimum into a fixed payment. Even paying today's minimum amount every month — without ever letting it decrease — cuts the payoff time dramatically.
A payoff plan that works in practice
- Stop adding to the balance. Move day-to-day spending to a debit card until the balance is cleared. A balance you keep charging against can't be paid off.
- Fix your payment amount. Pick the largest number you can sustain and automate it for a few days after each payday.
- If you hold several cards, pick an order. Highest APR first (avalanche) saves the most interest; smallest balance first (snowball) builds momentum. Pay minimums on the rest either way.
- Consider a 0% balance transfer if your credit allows. A 3–5% fee buys 12–21 months where 100% of your payment hits principal — but set the payment so the balance reaches zero before the promo expires.
- Redirect the payment when you're done. The habit is the hard part; once the card is cleared, send the same amount to savings — a funded emergency cushion is what prevents the next balance.
Where a personal loan fits
Debt consolidation loans run far below card APRs for good-credit borrowers. Consolidating makes sense when the loan rate is meaningfully lower and the fixed term forces payoff. Use our loan amortization calculator to compare the consolidation payment against your card payoff plan. The risk isn't the loan — it's clearing the cards and then charging them up again.