Why is credit card interest so costly compared to other debt?

Credit cards typically carry much higher APRs than loans or mortgages, and interest compounds monthly on the full remaining balance, so unpaid balances grow quickly.

Is paying only the minimum a good idea?

Minimum payments are usually a small percentage of the balance and are designed to extend repayment for years while maximizing interest paid. Paying more than the minimum, when possible, meaningfully shortens payoff time.

Debt

Credit Card Payoff Calculator

Calculate how many months it will take to pay off a credit card balance, and the total interest cost, based on your APR and a fixed monthly payment.

Credit Card Payoff

This payment does not cover the monthly interest charge, so the balance will keep growing. Increase your monthly payment and try again.

Total paid

Total interest paid

How it works

Formula & methodology

Credit card interest typically compounds monthly. This calculator simulates the payoff month by month: interest accrues on the remaining balance at the card's monthly rate (APR / 12), then your payment is applied. The simulation runs until the balance hits zero or 600 months pass.

Source: CFPB: How is credit card interest calculated?

Example

Worked example

Example: a $4,500 balance at 24.99% APR with a fixed $200/month payment takes about 31 months to pay off and costs roughly $1,635 in total interest — more than a third of the original balance.

FAQ

Frequently asked questions

Why is credit card interest so costly compared to other debt?: Credit cards typically carry much higher APRs than loans or mortgages, and interest compounds monthly on the full remaining balance, so unpaid balances grow quickly.
Is paying only the minimum a good idea?: Minimum payments are usually a small percentage of the balance and are designed to extend repayment for years while maximizing interest paid. Paying more than the minimum, when possible, meaningfully shortens payoff time.

Tips

Practical tips

If the calculator shows the balance never going down, that's a critical signal — your payment doesn't cover the interest charge, and the debt will grow, not shrink.
Consider a 0% APR balance transfer card if your credit qualifies — moving a high-interest balance to 0% for 12-18 months can save hundreds or thousands in interest during payoff.
Pay more than the card issuer's minimum whenever possible; minimums are calculated to maximize how long you carry (and pay interest on) the balance.

Results are estimates for general informational purposes only and do not constitute financial, tax, or legal advice. Always confirm important figures with a qualified professional or your lender before making a financial decision.