Credit Card Interest Calculator

How credit card interest is calculated

Credit card interest compounds monthly on whatever balance you're carrying. Your APR divided by 12 gives the monthly periodic rate, and each month's interest charge is that rate times your current balance. Whatever you pay above the interest reduces your principal; whatever you pay below it means your balance actually grows. That's why the calculator above recalculates interest every single month against the balance left over from the last one, instead of using one flat formula for the whole payoff.

Why minimum payments take so much longer than they look

Most issuers set the minimum payment as a percentage of your current balance (commonly 1-3%) with a small dollar floor. As your balance drops, so does the required minimum — which means less of each payment goes to principal over time, not more. On a high-APR balance, a low minimum percentage can leave payoff dragging on for decades, because the payment shrinks almost as fast as the balance does. This is the exact trap our engine models with real monthly iteration instead of a shortcut formula: there's no closed-form equation for a payment that keeps changing, so we simulate it month by month.

A fixed payment doesn't have this problem — because it never shrinks, it eats into principal a little more every month as interest falls, so payoff is faster and predictable from a standard amortization formula.

What an extra payment actually buys you

Because minimum payments recalculate off a shrinking balance, even a modest fixed top-up changes the trajectory completely: instead of your payment shrinking with your balance, it stays constant (or grows), so more of it hits principal every month going forward. The calculator's "pay X more per month" scenario runs the same iterative engine twice — once at your baseline payment, once with the extra added every month — and reports the months and interest saved directly, which is usually far more dramatic than people expect.

Fixed payment vs minimum payment: which should you enter?

Use fixed payment if you've committed to paying the same dollar amount every month regardless of balance (the fastest, most predictable path off debt). Use minimum payment to see what actually happens if you only ever pay what the statement requires — useful for understanding the real cost of doing the bare minimum, and for sizing how much of a top-up you'd need to escape the trap in a reasonable timeframe.

How to read the payoff schedule

Each row shows that month's payment split between interest and principal, plus the balance remaining afterward. Early on with a high-APR card, a large share of your payment goes to interest; as the balance falls, more goes to principal. Export the full schedule to CSV if you want to track your real payoff against the plan month by month.