How it’s worked out
Each month a twelfth of the APR is charged on the balance, rounded to the penny, and then your payment comes off. That repeats until the balance is gone; the last payment is whatever is left. With a fixed payment P on a balance B at a monthly rate i, the number of months comes from:
n = −ln(1 − B × i ÷ P) ÷ ln(1 + i)
For 3,000 at 22.9% paying 150 a month that is 25.43, so 26 payments, the last a small one. The calculator counts the months one by one rather than using the formula, so the penny rounding is exactly what a statement would show.
Worked example: 3,000 at 22.9% APR
Worked out by this calculator, with no more spent on the card:
| Pay each month | Paid off in | Interest |
|---|---|---|
| 100.00 | 3 years 9 months | 1,495.48 |
| 150.00 | 2 years 2 months | 814.94 |
| 200.00 | 1 year 6 months | 568.09 |
| 300.00 | 1 year | 360.97 |
Paying only a minimum of 3% of the balance (at least 25) instead takes 13 years 9 months and costs 4,101.46 in interest. To clear it in two years, pay 156.97 a month.
Why the minimum takes so long
A minimum payment is usually a small share of the balance, so as the balance falls the payment falls with it. Most of each payment goes on interest, and the last few hundred pounds or dollars take years to clear. Paying the same amount every month, even if it is only a little more than the first minimum, is what makes the difference.
How to read the result
- Paid off in: how long until the balance is zero at your fixed payment.
- Total interest: everything the card company charges you on the way.
- Saved against the minimum: the interest and time a fixed payment saves over paying only the minimum.
- The month-by-month table shows each payment split into interest and what comes off the balance.
Common mistakes
- Typing a payment smaller than the first month’s interest: the balance never falls, and the calculator says so.
- Forgetting that new spending on the card adds to the balance: the dates assume the card isn’t used.
- Using a promotional 0% rate for the whole time: when it ends the normal rate applies, so work out the two parts separately.
How to use it
- Type the balance and the card’s APR from your statement.
- Type what you’ll pay each month, or choose “To clear it by” and type the months.
- Check how your statement works out the minimum and type that share, to compare.
Questions
How long will it take to pay off my credit card?
Type your balance, rate and monthly payment and the calculator counts the months. For 3,000 at 22.9% APR, paying 150 a month takes 2 years 2 months.
Is paying only the minimum a bad idea?
It costs far more in interest and takes far longer, because the payment shrinks as the balance falls. On 3,000 at 22.9%, a 3% minimum costs 4,101.46 in interest against 814.94 paying a fixed 150.
How much should I pay to clear my card in two years?
Choose “To clear it by” and type 24 months. For 3,000 at 22.9% APR it is 156.97 a month.
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Elsewhere on Yuzool
- How to make a budget Budget’s guide
- Budget to find the money for a bigger payment
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