Credit card interest compounds daily at rates averaging 20%–28% APR—making even modest balances extremely expensive if only minimum payments are made. Our calculator shows how long it takes to pay off your balance, total interest charged, and how much extra payments save you.
On a $5,000 balance at 22% APR, paying only the minimum (typically 2% of balance or $25) takes over 30 years and costs more than $8,000 in interest—nearly double the original debt. Even paying $100/month fixed reduces this to about 7 years and $3,000 in interest.
A balance transfer moves your high-APR credit card balance to a new card offering a 0% intro APR for 12–21 months. During that period, 100% of your payment goes to principal. There is typically a 3%–5% transfer fee, but the interest savings usually far exceed this.
Credit card interest compounds daily. The daily periodic rate equals your APR divided by 365. Interest accrues on your average daily balance each day. This means carrying any balance from month to month triggers immediate compounding—there is no grace period on existing balances.
Credit card issuers typically set minimum payments at 1%–2% of the balance or $25—whichever is higher. This is deliberately designed to keep you in debt longer and maximize interest revenue. Always pay more than the minimum; ideally, pay the full statement balance each month.
Yes, significantly. Credit utilization (balances divided by limits) accounts for about 30% of your FICO score. Reducing utilization below 30%—ideally below 10%—can boost your score substantially. Paying off a maxed-out $5,000 card can raise your score by 50–100 points over time.
Generally, no. Closing an account reduces available credit (raising utilization), shortens average account age, and can lower your score. Keeping paid-off cards open with no balance is usually better—set a small recurring charge and auto-pay to keep them active.