What would it take to pay off your credit card?
A credit card payoff estimate connects your balance and APR with the amount you pay each month. New purchases can change the result, even when you make every payment on time.
Fixed payments and minimum payments are different scenarios
A fixed-payment example keeps the payment amount the same until the last payment. A minimum-only projection needs your issuer’s actual minimum-payment rule, which may change as the balance falls. Do not treat a fixed dollar amount as a universal minimum.
A $5,000 example
Assume a fixed 24% APR, monthly interest at 2%, and payments at the end of each month. There are no fees or new purchases.
Total repaid on a $5,000 balance
$5,000 borrowedinterest
| Monthly payment | Payments | Total interest | Total repaid | Final payment | |
|---|---|---|---|---|---|
| $200 a month | 36 | $2,000.57 | $7,000.57 | $0.57 | |
| $250 a month | 26 | $1,449.37 | $6,449.37 | $199.37 |
The final payment is smaller than the regular payment. Paying $50 more each month reduces interest by $551.20 in this illustration.
Why new purchases matter
The first month's interest on $5,000 is $100 in this model. A $200 payment reduces the balance to $4,900. Adding $100 of new purchases immediately afterward returns it to $5,000.
Real cards may calculate interest daily and apply different rates to different balances. Your statement may therefore differ from this simplified illustration.
One month, repeated
- Starting balance
- $5,000
- Interest
- +$100
- $5,100
- Payment
- −$200
- $4,900
- New purchases
- +$100
- $5,000
Questions
- What happens if my payment only covers interest?
- The principal does not fall in a model with no other changes. A payoff date would be misleading.
- Is paying $250 always the right choice?
- This example shows the numerical effect, not whether that payment fits your expenses.
- Does a 0% transfer make new purchases interest-free?
- Not necessarily. Purchase rates and grace periods can differ from the transferred balance. CFPB explains purchase interest.
- What if I have more than one card?
- Use the multiple-debt planning guide.