Credit Card Minimum Payment Calculator

This credit card minimum payment calculator figures how much interest you will end up paying and how long it will take to pay off your credit cards if you make only the minimum required payment. There are a couple of key points to keep in mind...

  • The calculator assumes you stop charging more so the balance stops rising due to spending.
  • Make sure to notice how it's not just the interest charges you pay that cost you so much, but it's also the interest you could be earning on those charges if you were investing them rather than paying them to the credit card company that hurts so bad.

If you're not sure what your minimum payment is just check the credit card disclosure statement and there should be language similar to "your minimum payment will be 2% of the balance or $10, whichever is higher."

Balance Owed:
Annual Interest Rate:
Minimum Percent Payment:
Minimum Dollar Payment:
Total Interest Paid:
Total # of Payments Made:
Years Until Debt Is Paid Off:
Foregone Interest Earnings:
Total Estimated Opportunity Cost:

How Much Interest Will You Pay If You Only Make The Minimum Credit Card Payment?

Making minimum payments on credit cards? It’s time to pay more, and this Credit Card Minimum Payment Calculator provides ample motivation.

Credit card bills show the total amount you owe, and the minimum payment due. Banks offer you two choices – either pay the full amount, or pay only the required minimum amount before the due date. Obviously, you can always pay any amount in between. If you fail to pay at least the minimum amount due, you will be charged late payment fees.

Paying the minimum payment required will result in interest charges, and it will keep debt hanging over your head for years. This minimum payment calculator reveals not only how much interest you will pay, but the total number of payments, number of years until your debt is paid off, foregone interest earnings, and your total estimated opportunity cost.

How Minimum Credit Card Payments Are Applied

Banks apply minimum payments to the balance and interest in a variety of ways. Typically, when making minimum payments, almost all the money goes toward interest incurred and only a tiny fraction goes toward the balance.

Beyond that, any amount you pay over the minimum due is normally applied to the balance with the highest annual percentage rate and then to balances with lower annual percentage rates.

Making minimum payments can ultimately result in paying over double the original balance – especially when you consider the total estimated opportunity cost. Cardholders making minimum payments and actively using their credit cards are very unlikely to pay off their balances.

Quickly Eliminate Credit Card Debt

Below are a number of things you can do to quickly eliminate credit card debt:

  • Stop spending with credit cards – If you stop using credit cards, you will eventually pay off your balances; albeit very slowly when only making minimum payments.
  • Pay more than the minimum due – You will be surprised how fast your credit card balances drop once you start paying more than the minimum.
  • Reduce annual interest rates – Transfer credit card balances to other credit cards that offer zero percent balance transfer rates or ask your credit card company for a better deal.

Remember: The higher your interest rates and the less you pay every month, the more you’ll end up paying in interest.

Responsible Credit Card Use

Be responsible! Stick to these rules, and you’ll build your credit while avoiding debt:

  • Always pay off your balance every month (this applies only after you pay off your credit card debt, until then, focus on paying down debt).
  • Only charge what you’ll be able to pay at the end of the month (start a budget to ensure overspending never occurs).
  • Revisit the Credit Card Minimum Payment Calculator when you’re tempted to just make minimum payments – is it really worth the cost?

Final Thoughts

This minimum credit card payment calculator is a motivational tool designed to steer you away from making minimum payments thus choosing to pay more instead. Making minimum payments has many disadvantages:

  • It keeps you in debt longer – think years and years.
  • It causes you to pay more interest – not only interest, but usually high interest.
  • It prevents you from investing – interest paid is money that’s never invested.
  • It adds to your stress level – as if life isn’t tough enough, debt increases anxiety and fatigue.

Rethink your spending. Don’t fall into the minimum payment trap – be smart and use credit cards responsibly. This credit card minimum payment calculator can only give you the motivation – you have to apply the lessons learned. I hope you do.

Credit Card Minimum Payment Calculator Terms & Definitions

  • Balance Owed – The amount of money owed on a credit card.
  • Annual Interest Rate – The percentage applied to your credit card purchases that were not paid in full each month.
  • Minimum Percent Payment – The minimum percentage that must be paid – usually found in your credit card disclosure statement.
  • Minimum Dollar Payment – The minimum amount required by your credit card company to be paid before due date (typically applies if minimum percent payment is lower than this amount).
  • Total Interest Paid – The total amount you pay for interest for using your credit card.
  • Total Number of Payments Made – The total number of payments you need make to pay off your credit card balance given the variables.
  • Years Until Debt is Paid Off – This is the number of years it will take you to pay off your credit card debt.
  • Forgone Interest Earnings – This is the interest you could have earned if you would have invested your money instead of paying the credit card company (assumes a 7% return).
  • Total Estimated Opportunity Cost – The sum of the total interest paid and the foregone interest earnings – what your overall opportunity and interest costs are as a result of debt.
  • Balance Transfer – The process of transferring your credit card balance to another credit card.
  • Balance Transfer Rate – Interest charged to the outstanding balance of your old credit card that is transferred to your new credit card.

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