Credit Card Payoff Calculator — Escape the Minimum Payment Trap

Credit card issuers typically set minimum payments at 1-3% of your balance. As you pay down your balance, the minimum payment also decreases. This is intentional — it maximizes the interest you pay over time. A $5,000 balance at 20% APR with 2% minimum payments can take over 30 years to pay off.

Fix your payment at the amount of the first month's minimum (or higher) and never let it decrease. This alone can cut your payoff time in half. Any extra money you apply beyond the minimum goes entirely toward reducing your principal balance.

No — this is a common myth. Carrying a credit card balance does NOT help your credit score. High credit utilization (balance divided by credit limit) can actually hurt your score. Pay your balance in full whenever possible.

Your monthly interest charge equals your balance multiplied by your APR divided by 12. For example, $5,000 at 22% APR costs you about $92 in interest each month. If your minimum payment is $100, only $8 goes toward reducing the actual debt.

Generally no. Closing cards reduces your total available credit, which can increase your credit utilization ratio and lower your score. Keep paid-off cards open but inactive, or use them for a small recurring charge that you pay in full each month.