How Credit Card Interest Works (and Why Minimums Take So Long)
APR to monthly interest
Card issuers quote an annual percentage rate (APR). A simple way to estimate a month of interest is balance × APR ÷ 12. On a $5,000 balance at 24% APR that is about $100 a month.
Most issuers actually calculate interest daily on your average daily balance, so your statement can differ by a few dollars a month. Our calculators use the monthly estimate and say so.
Why the payment amount matters so much
Only the part of your payment above that month's interest reduces the balance. At $200 a month, $5,000 at 24% APR takes 36 months and about $2,000 in interest. At $150 a month it takes 56 months and about $3,300 in interest.
What to do with this
Use the credit card payoff calculator with your own balance and APR, then try a payment $25 or $50 higher to see what it changes.
Try the Credit Card Payoff Calculator
Educational information, not financial advice. Check your card or loan agreement for your exact terms.