Credit Card Payoff Calculator
Minimum payments are calculated to be affordable, not to clear the debt. On a typical card they can keep a balance alive for well over twenty years.
The minimum payment trap
A minimum payment is typically the greater of a small percentage of the balance (1–5 %) or a fixed floor of a few pounds. Because it is a percentage, it falls as the balance falls — so the closer you get to clearing the debt, the slower you go.
On a £3,000 balance at 22.9 % APR with a 2.5 % minimum, the first payment is £75, of which £57 is interest. Only £18 comes off the debt. Continue on minimums alone and the balance takes over 25 years to clear, with total interest exceeding the original amount borrowed.
Paying a fixed £150 a month instead clears the same balance in about 24 months with roughly £700 of interest. The payment is double; the total cost falls by several thousand pounds. This is the single highest-value change most people with card debt can make.
How card interest is charged
Credit card interest compounds monthly on the outstanding balance:
One crucial detail: if you clear the statement balance in full every month, most cards charge no interest at all on purchases, thanks to the interest-free grace period. That grace period disappears the moment you carry a balance — and on many cards it does not return until you have cleared the balance in full again, meaning new purchases start accruing interest from the day they are made.
Cash withdrawals are worse still: they usually attract a fee, a higher rate, and no grace period whatsoever.
Getting out faster
- Pay a fixed amount, not a percentage. Decide the figure and keep it constant as the balance falls. This alone transforms the timeline.
- Consider a 0 % balance transfer. A transfer fee of 2–3 % buys typically 12–24 months interest-free. Divide the balance by the number of interest-free months and pay exactly that — otherwise the deal simply postpones the problem.
- Attack the highest rate first. With multiple cards, paying minimums on all and everything spare at the highest APR is mathematically optimal.
- Stop adding to it. No payoff plan survives continued spending on the same card.
If the payments are not manageable at all, free debt advice charities in most countries can negotiate with lenders, freeze interest and arrange a plan. Speaking to one early is far better than waiting until arrears build up.
Frequently asked questions
Does paying the minimum hurt my credit score?
Paying the minimum on time is not itself a black mark — the payment is recorded as made. What damages the score is high credit utilisation, the proportion of your limit you are using. Staying below about 30 % helps, and minimum payments keep utilisation high for years.
Should I clear savings to pay off a card?
Usually yes, mathematically. A card at 22.9 % costs far more than savings earn. The exception is your emergency fund: clearing it entirely often leads straight back to the card at the next unexpected expense. Keep one month of essentials and use the rest.
Is a 0% balance transfer always worth it?
Only if you clear the balance before the promotional rate ends, and if the transfer fee is less than the interest you would otherwise pay. Work out the fee in cash, compare it against the interest saved, and set a standing order for balance ÷ months so it is genuinely gone in time.