Credit Card Calculator

Each month: interest = balance × monthly rate; minimum = the greater of (balance × percentage) and the floor; principal repaid = minimum − interest; the new balance is the old one less the principal.

B

Balance owed at the start of the month

r

Monthly interest rate: the annual rate divided by twelve

p

Minimum payment percentage, as set in your card agreement

f

Minimum payment floor: the smallest amount the card will ask for

m

Months until the balance reaches zero, paying only the minimum

I

Total interest paid over that time

Use it the first time you decide to pay only the minimum on purpose, so you know what you have agreed to, and again any time the balance changes course. Two habits make it worth the thirty seconds. The first is checking what the floor does on a small balance: a 25 floor against a 10% minimum means that below 250 the floor is what you pay, and on a 1,000 balance a 1% minimum is rescued entirely by the floor — without which the payment would not even cover the month's interest. The second is watching how the answer moves when you change the percentage by one point, because it moves a great deal more than one point: on the chart below, going from 10% to 8% adds eleven months, and from 8% to 5% adds another thirty-three. What this page does not do is model the other two things you might actually do — pay a fixed amount each month, or pay a fixed amount after a one-off lump sum. Those are different calculations and they belong on different pages. One more thing worth saying plainly: the calculator is not the minimum payment warning printed on your statement. That warning is produced under prescribed rules that fix how the estimate is made; the figures here are the arithmetic behind it, run on the balance, the rate and the rule you typed.

1. 5,000 at 18% with a 10% minimum and a 25 floor

   1. Monthly rate: 18 ÷ 12 = 1.5% a month, or 0.015 as a decimal
   2. First month: interest = 5,000 × 0.015 = 75.00; the minimum is 10% of 5,000 = 500, which beats the 25 floor
   3. Principal repaid in month one: 500 − 75 = 425, leaving 4,575
   4. The minimum recomputes each month on the smaller balance, so the payment falls as the balance does
   5. The balance reaches zero after 45 payments
   6. Total paid: 5,861.13, so the interest is 861.13
   7. Interest per 100 borrowed: 861.13 ÷ 5,000 × 100 = 17.22

   The default, and the shape to understand before anything else: paying a falling percentage of a falling balance means the loan approaches zero rather than arriving at it. 45 months on a 5,000 balance is three and three quarter years, and the interest is 17.22 per 100 borrowed — a fifth of the original balance handed over for the use of it.

2. The same card with a 3% minimum

   1. Only the percentage changes: 10% becomes 3%
   2. First month: interest is still 75.00, but the minimum is 3% of 5,000 = 150
   3. Principal repaid in month one: 150 − 75 = 75, against 425 at the 10% minimum
   4. The balance falls far more slowly, and the minimum falls with it
   5. The balance reaches zero after 166 payments, or 13.8 years
   6. Total interest: 4,497.27, against 861.13 at 10%

   One field changed, and the term nearly quadruples while the interest multiplies by five. This is the single most important thing on the page: the minimum percentage is the difference between a debt you will clear in under four years and one that outlasts most car loans, and it is set by the card, not by you.

3. 1,000 at 12% with a 1% minimum, saved by the floor

   1. Monthly rate: 12 ÷ 12 = 1% a month
   2. First month: interest = 1,000 × 0.01 = 10.00; 1% of the balance is also 10.00, which is below the 25 floor
   3. So the minimum is 25.00, not 10.00 — the floor is what is being paid
   4. Principal repaid in month one: 25 − 10 = 15
   5. The balance reaches zero after 52 payments, or 4.3 years
   6. Total interest: 283.49, or 28.35 per 100 borrowed

   What an absolute floor is for. At 1% of a 1,000 balance the payment would be 10.00 against 10.00 of interest — the balance would never fall at all. The 25 floor turns a debt that never ends into one that takes a little over four years, and it is the reason small balances on low-percentage cards still get cleared.

This page models one balance, one rate and one minimum-payment rule, and a real card statement has more moving parts than that. New spending is absent, which is the biggest omission: a card you keep using is not being repaid by a minimum payment, it is being serviced, and a balance that grows while you pay the minimum never clears no matter what percentage the card uses. The grace period is absent too. If you pay in full each month you are charged no interest at all on purchases, and if you pay less than the full amount most cards charge interest from the date of each purchase rather than from the statement date — so the first month of interest on this page is a simplification, and a card that compounds daily will differ from a card that compounds monthly. Your rate is not fixed in practice: most cards have a variable rate tied to a market benchmark, so a rate rise lengthens the schedule. Fees are absent, including annual fees and late payment charges, and missing a payment usually triggers a penalty rate that changes the answer completely. Nothing here covers the minimum payment warning on a real statement, which is calculated under rules that prescribe how the estimate is produced. And no currency is attached to any figure: 5,000 and 25 mean whatever unit you typed, and a 25 floor is a very different thing in a currency where the smallest useful unit is a hundred times larger.

How long does it take to pay off a credit card paying the minimum?

Longer than most people expect, and the percentage decides it. On 5,000 at 18%, a 10% minimum clears in 45 months; a 3% minimum takes 166 months, which is nearly fourteen years. Both are the same balance at the same rate, so the difference is entirely the card's minimum payment rule.

Why does paying the minimum take so long?

Because the minimum is a percentage of the balance, so it falls as the balance falls. Early on you repay a good share of the principal; later the same percentage is a much smaller payment, and a larger share of it goes to interest. The debt approaches zero rather than arriving at it, and the last few years move very little.

What is a minimum payment floor?

The smallest amount the card will ask for, regardless of what the percentage works out to. It matters on small balances: at 1% of 1,000 the minimum would be 10.00 against 10.00 of monthly interest, so the balance would never move. A 25 floor is what turns that into a five-year payoff.

Should I pay more than the minimum?

Almost always, and the second example above shows why: the difference between the minimum and a fixed amount is not proportional to what you pay, it is disproportionate. Paying a fixed 150 a month on that balance clears it in 47 months rather than 166, and paying more than that shortens it further. What it costs you is the liquidity, and whether that matters is your call.

Does the minimum payment change if I keep using the card?

Yes, and it will usually rise, because the minimum is a percentage of a larger balance. But this page assumes no new spending, so it describes a card you have stopped using. If you are still spending on it, the schedule here does not apply — you are servicing a balance rather than repaying one, and no minimum payment will clear it.

Why is my statement's minimum different from the first figure here?

Because cards compute it in different ways. Some apply a percentage to the whole balance, some add new interest and fees to a percentage of the principal, some include any amount over your credit limit or any instalment due in full, and some add last month's shortfall. The first month's figure this page returns is the simplest version of that rule; check it against your statement and adjust both the percentage and the floor until they match.

• 12 CFR 1026.7 — Periodic statement (Regulation Z): what a credit card statement must disclose, including the minimum payment and the minimum payment warning — Electronic Code of Federal Regulations, Office of the Federal Register (United States)
• G.19 Consumer Credit: the monthly series on credit card interest rates and revolving balances, which is where the rate you type comes from — Board of Governors of the Federal Reserve System (United States)