What is a Credit Card Interest Calculator?
A credit card interest calculator is a financial tool that helps you determine how much interest you'll pay on your credit card balance over time. It provides insights into your repayment timeline based on different payment strategies and shows the total cost of carrying credit card debt.
When to Use a Credit Card Interest Calculator
This calculator is particularly useful in the following scenarios:
- When planning to pay off your credit card balance and wanting to know how long it will take
- When deciding between making minimum payments or larger monthly payments
- When comparing different payment strategies to minimize interest costs
Examples
Example 1: Paying a Fixed Monthly Amount
How long will it take to pay off a credit card balance of $5,000 with an APR of 18% if you make monthly payments of $200?
| Balance | APR | Monthly Payment | Result |
|---|---|---|---|
| $5,000 | 18% | $200 | Total Interest: $1,314.74 Months to Payoff: 32 |
Example 2: Setting a Target Timeframe
How much should you pay monthly to clear a credit card balance of $3,500 with an APR of 22% in 18 months?
| Balance | APR | Target Months | Result |
|---|---|---|---|
| $3,500 | 22% | 18 months | Required Monthly Payment: $227.61 Total Interest: $597.02 |
Example 3: Payment Too Low to Cover Interest
What happens if you attempt to pay off a $10,000 balance with an APR of 24% by making only $150 monthly payments?
| Balance | APR | Monthly Payment | Result |
|---|---|---|---|
| $10,000 | 24% | $150 | Monthly Interest: $200 Result: Payment too low to cover interest |
Important Considerations
When using this calculator, keep in mind:
- The calculation assumes a fixed APR and no additional charges or purchases
- Your monthly payment must be greater than the monthly interest to make progress on paying down the principal
- Making larger payments reduces both the total interest paid and the time needed to pay off the balance
- Some credit cards compound interest daily rather than monthly, which may result in slightly higher interest costs