Credit Card Payoff & Minimum Payment Trap Calculator
See how long a credit card balance takes to clear and the total interest a fixed repayment costs you.
Last reviewed by the myCalculator Editorial Team
Input Parameters
Must exceed the monthly interest charge, or the balance will never reduce.
Calculation Results
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Formula & How Credit Card Payoff & Minimum Payment Trap Calculator Works
Credit card interest compounds monthly on the outstanding balance, so a repayment only reduces principal by the amount exceeding that month's interest charge. Australian minimum repayments are typically 2%–3% of the balance, which means a card paid at the minimum can take decades to clear and cost more in interest than the original purchases. Worked example: an $8,000 balance at 19.99% p.a. with a fixed $300 monthly repayment takes about 35.6 months to clear, and you pay about $10,666 in total, so roughly $2,666 is interest. Paying even $50 more a month shortens that noticeably, and stopping new purchases is essential or the balance will not fall.
- Enter Current Card Balance ($) ($): Input your target parameter value.
- Enter Purchase Interest Rate (% p.a.) (%): Input your target parameter value.
- Enter Fixed Monthly Repayment ($) ($/mo): Input your target parameter value.
- Apply Formula: Calculate using
n = -ln(1 - (B × r) / M) / ln(1 + r), where r = APR/12 and M = fixed monthly payment. - Review Results: View exact computed answers, metrics, and worked mathematical proofs.
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Frequently Asked Questions (FAQs)
How long does it take to pay off a credit card with minimum payments?
A $8,000 balance at 19.99% paid at the 2% minimum takes well over 30 years and costs more in interest than the original balance, because the required payment shrinks as the balance falls.
Does a balance transfer actually help?
A 0% balance transfer helps only if you clear the balance within the promotional window. Any remainder reverts to the revert rate, which is often higher than a standard purchase rate.
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Authoritative Standards & Verified Reference Citations
Calculations and mathematical logic on this page are grounded in published statutory rules, regulatory standards, and official government data published by the following bodies:
Consumer guidance on mortgage borrowing capacity, compound interest formulas, and loan fees.
Official cash rate target announcements, monetary policy statements, and national economic statistical data.
Official U.S. Federal Funds Rate and comprehensive macroeconomic time-series data.
Key Eurozone interest rates, deposit facility rates, and monetary policy operations.
Residential mortgage serviceability buffer framework (3.0% stress test hurdle rate).
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