Credit Card Interest
What the balance costs in interest each month, and how long a given payment takes to clear it.
Recent
Formula
How the calculation works
Card interest compounds against you: the charge is added to the balance, and next month's charge is worked out on the larger figure. The calculator applies interest first and the payment second, which is the order issuers use.
The monthly payment decides everything. At 150 a month on a 3,000 balance at 24% the card clears in 26 months and costs 870 in interest; pay 100 and it takes far longer; pay only the 60 of interest and it never clears at all.
Common mistakes
- Paying a round figure that feels affordable without checking it against the monthly interest. Below that line the balance grows and the debt never ends.
- Assuming the minimum payment is designed to clear the card. It is usually set near the interest so the balance persists for years.
When to use it
- Use it to see how long a balance will take at a payment you can actually make, and what the interest adds over that time.
- It is also the check before a balance transfer: run the current card and the new rate side by side and see whether the move shortens the payoff enough to be worth the fee.
Worked example
A 3,000 balance at 24% paid at 150 a month: 60 of interest the first month, cleared in 26 months, 870 in interest.
Common questions
What if the payment is below the interest?
The balance never falls, so the calculation stops and says so plainly: at that payment the card can never be cleared.
Interest first or principal first?
Each payment covers that month's interest first and the rest reduces the principal, which is the order issuers actually apply.
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