How credit card interest works
Your APR is a yearly rate, but the card charges it a little at a time. Divide your APR by 12 and you get roughly the share of your balance added as interest each month. At 24% APR, that's about 2% a month: around $100 a month on a $5,000 balance.
Every payment covers that interest first. Only what's left over shrinks your balance. That's why small payments feel like they go nowhere.
This calculator uses monthly interest, which is close to what card statements show. Most cards actually calculate interest daily on your average balance, so your real numbers can be off by a few dollars.
Snowball vs. avalanche
Both methods pay the minimum on every card and throw every extra dollar at one target card. When that card is paid off, its payment rolls onto the next one.
- Avalanche: target the highest interest rate first. It costs the least in total interest.
- Snowball: target the smallest balance first. You pay off whole cards sooner, which keeps a lot of people motivated.
The best method is the one you'll stick with. The calculator shows both, so you can see exactly what the snowball's quick wins would cost you.
Common questions
How long does it take to pay off $5,000 at 24% APR?
Paying $200 a month, about 36 months, and you'll pay about $2,000 in interest. Bump it to $250 a month and it's about 26 months with about $1,450 in interest. That extra $50 a month saves you around $550.
Why does paying only the minimum take so long?
Minimum payments are set low, often just the month's interest plus a small slice of the balance. As your balance drops, so does the minimum, which stretches the payoff out even longer. Paying a fixed amount every month, even if it's only a little above the minimum, makes a big difference.
Does a balance transfer help?
It can. A 0% intro APR card stops interest for a set time, so every dollar goes to the balance. Watch for the transfer fee (often 3% to 5% of the balance) and have a plan to pay it off before the intro rate ends.