What is a credit card payoff calculator
Credit cards work differently from other kinds of debt: the minimum payment isn't fixed, it's recalculated every month as a percentage of the remaining balance (typically 2% to 5%, with a minimum floor amount). That means as the balance drops, the minimum payment drops too — and a smaller and smaller share of that payment actually reduces the debt. This calculator simulates that behavior month by month to show the real payoff time, and compares it against a fixed payment.
How the calculation works
Paying only the minimum: each month, interest is calculated on the current balance, the minimum payment is recalculated as a percentage of that balance (respecting the floor), and the difference between the payment and the interest reduces the balance. Since there's no closed-form formula for this scenario — the payment changes every month — the calculator simulates it month by month until the balance reaches zero.
Fixed payment: with a constant payment every month, the payoff time is calculated directly from the compound-interest amortization formula, the same way as a loan with fixed installments.
Savings switching from minimum to fixed: the time and total interest from the two scenarios above are compared, and the difference between them shows how much time and money you save by choosing to pay a higher fixed amount instead of following only the minimum.
Worked example: paying only the minimum
With a $5,000 balance, a 24% annual interest rate, a minimum payment of 3% of the balance, and a $50 floor, the debt takes approximately 165 months (nearly 14 years) to pay off, with a total of about $7,774 paid in interest — more than the original balance itself.
Worked example: fixed payment
With the same $5,000 balance and 24% annual interest rate, a fixed payment of $200 a month pays off the debt in approximately 35 months (about 3 years), with a total of about $2,001 in interest.
Worked example: savings switching from minimum to fixed
Comparing the two examples above, switching from the minimum payment to a fixed $200 payment cuts the payoff time from approximately 165 to 35 months — nearly 11 years less — and avoids about $5,773 in interest.
What the calculator doesn't account for
These calculations assume a fixed interest rate applied monthly to the balance, with no new purchases, missed payments, extra fees, or promotional rates. The minimum payment percentage and floor vary from card to card, so confirm those figures on your statement or with your card issuer before making decisions based on these results.