What to enter
- What do you want to see?
- “Minimum payment vs. adding extra” compares your current payment with a higher one. “Payment needed to be debt-free by a date” solves for the payment that clears the balance in a chosen number of months.
- Current balance
- What you owe today, from your latest statement. For a credit card, use the statement balance plus any new charges you cannot avoid.
- Interest rate (APR)
- The annual rate on that balance, from the statement or account page. Credit card APRs are often much higher than installment loan rates.
- Monthly payment you make now
- The fixed amount you plan to pay each month. Card minimums shrink as the balance falls, so this tool assumes you keep paying the same amount, which is faster than paying a declining minimum.
- Extra payment per month
- The additional amount you could add. It is applied entirely to this balance.
- Months until debt-free
- Only in the target-date mode: the number of months in which you want the balance to reach zero.
How to read your results
In the comparison mode the headline is the interest you save by adding the extra payment, with the time saved underneath. The table shows the payoff time, total interest and total paid for both payment levels, and the line chart plots the balance over time for each. The gap between the two lines is the effect of the extra payment. In the target-date mode the headline is the required monthly payment, and the table shows the total interest at that payment and how it compares with your current payment.
If your payment does not exceed the interest charged each month, the balance never falls. The calculator says so and shows the monthly interest, because that is the minimum you must exceed to make any progress.
The calculation
Each month, interest is added to the balance at the monthly rate (APR ÷ 12), then your payment is subtracted:
For the target-date mode, the required payment is the level payment that clears the balance in exactly the number of months you chose:
The payoff time can also be found directly as n = −ln(1 − B × r ÷ payment) ÷ ln(1 + r), which only has a solution when the payment is larger than B × r.
Worked example
$8,000 at 19.99% APR, paying $200 a month
The first month’s interest is about $133.27, so $66.73 of the $200 payment reduces the balance. At $200 a month the debt takes 5 years 7 months to clear and costs $5,288 in interest.
Adding $100 a month makes the payment $300. The balance is gone in 3 years, with $2,667 in interest, so the extra $100 saves $2,621 and 2 years 7 months.
A target date. To clear the same balance in 24 months, the payment must be $407.13, and total interest would be $1,771.
A payment that is too small. A $100 payment on that balance is less than the monthly interest of $133.27, so the balance would not decline.
Choosing what to pay first
This tool works on one balance at a time, but most people with debt have several. Two popular strategies are worth knowing. The avalanche method pays minimums on everything and puts every spare dollar toward the balance with the highest interest rate first. It costs the least interest. The snowball method targets the smallest balance first, which clears accounts sooner and can help some people stay motivated even though it costs somewhat more interest. Either approach works if you keep going; the best one is the one you will follow.
To use the calculator with several debts, run it for the highest-rate balance with the payment you can direct to it. When that balance is gone, add its former payment to the next one, and run the calculator again for the next balance at its remaining amount. The freed-up payment is what makes later balances go away faster.
Before adding extra payments, check that you have a small cash buffer, so an unexpected expense does not push the balance back onto a card. Also check for promotional balance transfer offers, which can cut the rate for a period, but read the fee and the end-of-promotion rate before you move a balance.
Assumptions and limits
Real credit cards compound interest daily on the average daily balance, minimum payments usually fall as the balance falls, and new purchases add to the balance. This calculator uses a monthly rate and a fixed payment and assumes no new charges, fees or rate changes. Under federal rules, credit card statements include a disclosure of how long it would take to pay off the balance making only minimum payments, which is a useful benchmark next to this tool. For an installment loan with a fixed term, the loan calculator builds the full amortization schedule. To see how much a saving habit could grow instead, use the savings calculator.
Frequently asked questions
Why does paying only the minimum take so long?
Because a large part of each minimum payment goes to interest, especially at card-level rates. A balance shrinks slowly when little of the payment reduces principal, and minimums fall as the balance falls, which stretches the payoff further.
Is it better to pay a bit extra on one debt or spread it out?
To minimize interest, concentrate extra payments on the highest-rate debt while paying at least the minimum on the others. Concentrating extra money on one balance also clears it sooner.
What if my minimum payment changes each month?
This calculator assumes a fixed payment. If your minimum shrinks, paying a fixed amount is faster than paying the minimum, so the result will be more favorable than a strict minimum-only plan.
Can I use this for a loan with a fixed term?
Yes, but the loan calculator is designed for that and shows the complete amortization schedule.
Does a 0% balance transfer change the answer?
It can. Enter 0 as the rate to see the effect during the promotional period, but remember that fees and the rate after the promotion ends also matter.