Credit Card Interest Calculator

Credit card interest compounds daily, meaning you pay interest on interest. This calculator shows exactly how much interest accumulates over time with minimum payments versus paying off your balance.

The average credit card APR ranges from 18% to 29%, and minimum payments typically cover only interest plus 1% of the principal. This means paying off a $5,000 balance at 22% APR with minimum payments can take 15-30 years and cost $8,000-$12,000 in interest.

Our calculator helps you see the true cost of carrying credit card debt. Enter your balance, APR, and minimum payment to see how long it takes to pay off and how much interest you'll pay over time.

Credit card interest uses the daily balance method with compounding. Your APR is divided by 365 to get a daily rate, which is then applied to your balance each day. Interest compounds monthly, meaning unpaid interest gets added to your principal balance.

Minimum payments are calculated as a percentage of your balance (usually 1-3%) plus interest and fees. With high APRs, minimum payments often cover only interest, leaving your principal balance unchanged. This creates a cycle where you pay interest but never reduce debt.

The calculator shows how this compounding effect grows over time. A $5,000 balance at 22% APR generates about $92 in monthly interest. If your minimum payment is $100, only $8 goes toward principal, meaning it takes decades to pay off.

Minimum payments are designed to keep you in debt longer, maximizing interest revenue for credit card companies. With typical minimum payment formulas, you'll pay 2-3x your original balance in interest charges over the life of the debt.

For example, a $10,000 balance at 24% APR with a 2% minimum payment takes approximately 25 years to pay off. You'll pay over $20,000 in interest alone, more than double your original balance. The calculator shows these exact costs for your specific situation.

Making only minimum payments means most of your payment goes to interest, not principal. This traps you in a cycle where debt never decreases, even though you're making regular payments. Breaking this cycle requires paying more than the minimum.

Paying more than the minimum dramatically reduces payoff time and interest costs. Adding just $50-$100 extra per month to a $5,000 balance can cut payoff time from 20 years to 3-5 years and save thousands in interest.

The debt avalanche method prioritizes paying off the card with the highest APR first while making minimums on others. Once the highest-rate card is paid off, you roll that payment into the next-highest APR card. This mathematically minimizes total interest paid.

The debt snowball method focuses on paying off the smallest balance first for psychological motivation. While it may cost slightly more in interest, seeing debts disappear can provide motivation to continue. Both methods work better than minimum payments alone.

If you receive structured settlement payments and are drowning in high-interest credit card debt, you have an option that balance transfers and debt consolidation loans can't match: accessing money you already own. Selling some of your future payments for a lump sum can eliminate credit card debt immediately — no new debt, no balance transfer fees, no risk of promotional rates expiring.

With Smarter Payouts, you can see your instant offer range (minimum to maximum payout) in under 60 seconds — no phone call required, no personal information needed upfront. This privacy-first approach lets you explore whether selling makes sense for your situation without any pressure or commitment from salespeople.

Important: All structured settlement transfers require court approval, which protects you by ensuring the transaction is fair and in your best interest. We encourage you to seek independent professional advice before making any decision. Selling may not be right for everyone, but for those facing years of credit card interest at 20%+ APR, it can provide immediate relief and save thousands in interest charges.

Credit card companies use the average daily balance method. They add up your balance at the end of each day during the billing cycle, divide by the number of days, then multiply by your daily periodic rate (APR ÷ 365).

Your daily periodic rate is your APR divided by 365. For a 22% APR card, the daily rate is 0.0603%. On a $5,000 balance, this generates about $3.01 in daily interest, or roughly $92 per month. This interest compounds monthly, meaning unpaid interest gets added to your principal.

The calculator uses these exact formulas to show your interest accumulation. It accounts for daily compounding and shows how your balance changes over time with different payment strategies.

A $5,000 balance at 22% APR with a $100 minimum payment takes approximately 8 years to pay off and costs $4,600 in interest. Increasing payments to $200 per month cuts payoff time to 2.5 years and reduces interest to $1,200 - saving $3,400.

A $10,000 balance at 24% APR with a $200 minimum payment takes about 12 years to pay off and costs $18,000 in interest. Paying $400 per month reduces payoff time to 3 years and interest to $2,400 - saving $15,600 in interest charges.

These examples show how small payment increases create massive interest savings. The calculator lets you input your exact balance, APR, and payment amount to see your personalized payoff timeline and interest costs.

The best way to avoid credit card interest is to pay your balance in full each month. This eliminates interest charges entirely and lets you use credit cards as a payment tool without debt costs. Most cards offer a grace period of 21-25 days where no interest accrues if you pay in full.

If you can't pay in full, pay as much as possible above the minimum. Even small increases reduce interest costs significantly. Set up automatic payments for more than the minimum to ensure you're always making progress on principal.

Balance transfer cards with 0% APR promotional periods can help, but they require good credit and charge 3-5% transfer fees. You must pay off the balance before the promotional period ends, or you'll face the card's regular APR, which could be higher than your original rate.

Understanding how credit card interest works is the first step to paying off debt faster. Our calculator shows exactly how much interest you'll pay and how long it takes to become debt-free with different payment strategies.

Minimum payments keep you trapped in debt for decades while credit card companies profit from interest charges. Paying more than the minimum, even small amounts, dramatically reduces payoff time and total interest costs.

If traditional strategies aren't enough and you receive structured settlement payments, exploring a lump-sum payout could help you eliminate credit card debt entirely. Use this calculator to understand your interest costs, then explore your options for becoming debt-free faster.