CostWise

    This Is How Much Your Credit Card Is Really Costing You

    Updated

    Most people underestimate how fast credit card interest compounds because it's recalculated on your balance every single month. Enter your balance, APR and monthly payment to see exactly how long payoff will take, how much interest you'll pay in total, and how much of your very first payment actually reduces what you owe.

    Time to pay off
    2y 2m
    Total interest
    $514
    Total paid
    $2,514
    You'll pay $514 in interest — 26% on top of your original $2,000 balance.
    How this was calculated
    Monthly interest rate
    22.00% / 12 = 1.833%
    Month 1 interest charge
    $2,000 x 1.833% = $37
    Month 1 principal reduction
    $100 - $37 = $63
    Repeated monthly until balance = $0
    2y 2m total

    What your payoff numbers actually mean

    Paying $100 a month clears your $2,000 balance in 2y 2m. You'll hand the issuer $514 in interest on top of what you borrowed, for $2,514 repaid in total — meaning 20% of every dollar you repay is pure interest, not debt reduction.

    Interest as % of balance
    26%

    $514 of interest on a $2,000 balance.

    Month 1: interest vs principal
    $36.67 vs $63.33

    The principal share grows every month as the balance falls.

    Paying $150 instead
    1y 4m · $315 interest

    10 months and $200 saved versus your current payment.

    A balance transfer at your entered 3.0% fee would cost $60.00 up front on this balance. That is $454 less than the $514 of interest you are on track to pay, so a genuine 0% transfer you can clear before the promo ends would leave you ahead — provided you stop adding new purchases to the card.

    Two real repayment scenarios, worked through

    Small balance, minimum-style payment

    Balance
    $2,000
    APR
    22.00%
    Monthly payment
    $100

    Month 1 interest = $2,000 x 1.833% = $36.67; only $63.33 of the $100 payment reduces principal. Repeating monthly until the balance hits $0 takes 2y 2m.

    Payoff 2y 2m · Total interest $514 · Total repaid $2,514

    A $2,000 balance at a typical 22% APR is not a small debt when the payment is only $100 — interest adds roughly a quarter of the original balance before it clears.

    Larger balance on a high-APR store card

    Balance
    $6,500
    APR
    27.50%
    Monthly payment
    $250

    Month 1 interest = $6,500 x 2.292% = $148.96; only $101.04 of the $250 payment reduces principal. Repeating monthly until the balance hits $0 takes 3y 4m.

    Payoff 3y 4m · Total interest $3,496 · Total repaid $9,996

    Doubling the balance and adding 5 APR points more than quadruples the interest bill, because the debt stays outstanding for years rather than months.

    Content last updated: September 17, 2026

    How this calculator works, assumptions, and sources

    How this calculator works
    Formula

    Monthly interest = remaining balance × (APR ÷ 100 ÷ 12). Each month the interest is added to the balance and the payment is subtracted; this repeats until the balance reaches $0 or the 1,200-month cap. If the payment is less than or equal to the first month's interest, the balance never decreases.

    Assumptions
    • Interest compounds monthly on the remaining balance rather than daily — real issuers use an average daily balance, which is slightly higher.
    • APR and payment amount stay constant for the life of the payoff: no rate changes, promotional periods, or missed payments.
    • No new purchases are added to the balance during the payoff period.
    • The alternative payment and balance-transfer fee fields are comparison-only and never affect the primary payoff figures.
    Default values & where they come from
    • Balance: $2,000; APR: 22%; monthly payment: $100.
    • Alternative comparison payment: $150; balance-transfer fee: 3%.
    • Average US credit card APR ~21.5% (Federal Reserve G.19, 2025).
    • Common minimum payment ≈ 2% of balance or $25 (CFPB guidance).
    Limitations
    • Does not model daily compounding, so real-world interest may run a few percent higher than shown.
    • Does not account for promotional 0% APR periods, penalty APRs, or variable-rate changes.
    • Excludes annual fees, late fees, cash advances, and issuer minimum-payment formulas.
    • The balance-transfer comparison is a simple fee-versus-interest estimate, not a full amortization of the new card.
    When not to rely on this calculator
    • Not a substitute for your issuer's official payoff quote, a debt-management plan, or credit counseling.
    • Not for modelling multiple cards with different APRs at once — run each balance separately.
    • Not suitable for cash advances, which usually have no grace period and a higher APR.
    • Not suitable for debts with a variable minimum-payment formula rather than a fixed dollar payment.
    Sources

    Corrections welcome — see our corrections policy and editorial policy.

    Credit card interest questions people actually ask

    How is credit card interest calculated in this tool?
    Each month the calculator multiplies your remaining balance by your APR divided by 12 to get that month's interest charge, adds it to the balance, then subtracts your payment. It repeats this until the balance reaches zero (or 1,200 months pass). Real issuers actually compound daily using an average daily balance, which produces slightly higher interest than this monthly approximation — usually within a few percent. If your payment is at or below the first month's interest charge, the balance never shrinks and the calculator reports 'Never' instead of a payoff time.
    Why does my payment barely move the balance some months?
    Because interest is charged before your payment is applied. On a $2,000 balance at 22% APR, the first month's interest is $2,000 x (22/100/12) = about $36.67. If you pay $100, only $63.33 actually reduces the principal — the rest just covers that month's interest. As your balance falls, the interest portion shrinks and more of each payment reaches principal, which is why payoff accelerates in the final months rather than staying linear.
    What does the 'never pays off' warning mean?
    It means your monthly payment is less than or equal to the interest your balance generates in a month. At a $2,000 balance and 22% APR, monthly interest is about $36.67; a $35 payment can never reduce the balance because it doesn't even cover that charge, so the balance grows every month. The fix is always the same: raise the payment above the current monthly interest amount, ideally by a wide margin, or reduce the APR through a lower-rate card or balance transfer.
    What APR should I enter?
    Use the purchase APR from your most recent statement, not a promotional or introductory rate. If you're carrying a cash advance or balance transfer with a different rate, run this calculator separately for each balance, since they accrue interest independently. The U.S. average is roughly 21-24% for standard cards, but store and subprime cards often run 28% or higher — a 5-point difference on a $3,000 balance changes total interest by several hundred dollars over a typical payoff period.
    How much does increasing my monthly payment actually save?
    Use the optional 'alternative payment' field to compare directly. Because interest is recalculated on a shrinking balance each month, a higher payment reduces both the number of months you pay interest and the balance it's charged against, so savings compound. On many balances, raising the payment by 50% cuts total interest by well over half, not just 50%, because you exit the loop far sooner. The calculator shows your exact side-by-side numbers rather than a rule of thumb.
    Is a balance transfer worth the fee shown here?
    The optional balance transfer fee field estimates the one-time cost (typically 3-5% of your balance) of moving debt to a lower- or 0%-APR card. Compare that dollar figure against your calculated total interest: if the fee is smaller than the interest you'd otherwise pay, and you can realistically pay off the balance before any promotional rate ends, the transfer usually wins. If your payment is low enough that payoff would take years, the ongoing rate after the promotional period matters more than the upfront fee.
    Why is my total paid so much higher than my balance?
    Total paid is your original balance plus every dollar of interest charged before the balance reached zero — shown as 'Total interest' and 'Total paid' above. Because interest is recalculated monthly on whatever balance remains, a low payment relative to the balance and APR lets interest accumulate for a long time before principal catches up. The interest-to-balance percentage in this calculator's interpretation section shows that cost as a percentage of what you originally borrowed, which is often the clearest way to see the true price of carrying the debt.

    This page was last updated September 17, 2026. Spotted an error? Report it via our corrections policy.