How payoff is calculated
Each month, interest is added at one twelfth of the APR, then your payment comes off. That repeats until the balance reaches zero. Your first payments are mostly interest; as the balance shrinks, more of each payment goes to the debt itself.
To find the payment that clears a balance in a set number of months, the calculator uses the standard loan formula:
payment = balance × r ÷ (1 − (1 + r)−months), where r is APR ÷ 12.
Worked example
A $6,000 balance at 22.9% APR builds $114.50 of interest in the first month. Paying $200 a month clears it in 3 years and 9 months, with $2,991 in interest.
Paying $300 instead takes 2 years and 2 months and costs $1,630 in interest, saving $1,361. To be done in exactly two years you would pay $313.94 a month.
Why the minimum payment takes so long
Card minimums are usually 1–3% of the balance plus interest, so they shrink as the balance does. That keeps the payment comfortable but stretches payoff over many years. Picking a fixed amount and sticking to it, even as the minimum drops, is one of the simplest ways to cut the total cost.
What this leaves out
Card issuers usually charge interest daily on the average daily balance, which comes out slightly higher than the monthly figure used here. New purchases, fees, promotional rates and late-payment penalty APRs are not included. Stop using the card while you pay it down, or the numbers will not hold.
Paying off more than one card or loan? The debt payoff calculator compares the snowball and avalanche methods. Once the cards are clear, the FIRE calculator shows what that freed-up money could do.