If you only pay the minimum on your credit cards, you might pay 2–3x the original charge in interest. Here's how to find out what your debt really costs.
How Credit Card Interest Works
Credit cards charge interest daily. Your daily rate is your APR divided by 365. Each day, interest accrues on your balance. When you make a payment, it covers accrued interest first, then principal.
Example: A $5,000 balance at 22% APR accrues about $3/day in interest. Over a month, that's ~$91 — before you've paid down a single dollar of principal.
The Minimum Payment Trap
Minimum payments are typically 1–3% of your balance plus interest. On a $5,000 balance, that's $100–$150/month. Most of that goes to interest — only $10–$30 hits principal.
Result: A $5,000 balance with $150/month minimums takes about 20 years to pay off and costs over $7,000 in interest. You pay more in interest than you originally borrowed.
How to Calculate Your Interest
For a rough estimate:
- Find your current balance and APR on your statement
- Multiply balance by APR to get annual interest
- Divide by 12 for monthly interest
- Subtract your monthly payment from that — the remainder is what goes to principal
The Power of Extra Payments
Every dollar above the minimum goes straight to principal, which reduces future interest. On that $5,000 at 22%, adding $100/month extra cuts the payoff from 20 years to under 3 years and saves over $5,000 in interest.
Enter your balance, APR, and payment to see your exact payoff timeline and total interest with the Debt Payoff Calculator.