Credit Card Payoff Calculator

Total Principal Paid


Total Interest Paid


Monthly Payment


Months to Payoff


% Principal


% Interest


Living with debt can be stressful, especially when you are paying high-interest rates on credit card debt. It can feel so overwhelming that some people choose to simply stick their heads in the sand and do what they can to get by.

But just imagine for a moment what it would feel like to have the burden of credit card debt lifted off your shoulders? What if you could stop paying interest on your debt, have access to emergency funds, and start saving for the future? Feels pretty good, doesn’t it?

At this moment, that amount of financial freedom may feel like a pipe dream, but there are steps you can take to ease your credit card debt. The first step is to take a hard look at your situation and truly understand the numbers. 

Understanding Your Credit Card Debt

Perhaps you eagerly signed up for a credit card when you were young and/or desperate for cash and were so happy to be approved that you never bothered to read the fine print. That’s okay. It happens, but if you want to see just how quickly you can pay off your credit card, you need to understand the terms of your agreement.

Reading Your Credit Card Statement

It is time to pull out your credit card statement from the pile of junk mail on the kitchen counter or pull up your account online. Here’s what you need to look for:

  1. Your current credit card balance. This will include the amount of money you have charged + the interest that has been applied.
  2. Your interest rate or APR. The interest rate or annual percentage rate (APR) represents the percentage the credit card company is charging for you to carry a balance.
  3. The minimum monthly payment that is required to stay in good standing. Keep in mind that credit card companies will often offer relatively low minimum monthly payment options. This strategy allows them to keep collecting interest on your balance while making you feel like you are paying off your debt. However, if all you can handle is the minimum payment, that is a great place to start. 

Principal Vs. Interest

It is also important to understand the difference between principal and interest before using the credit card payoff calculator. Remember that:

Principal = The amount of money charged to the card. 

Interest = The cost of borrowing the principal. Interest is expressed as a percentage.

Balance due = The principal + the interest amount. 

Using the Credit Card Payoff Calculator

Once you have determined these three key figures, you can enter them into the credit card calculator. For example, let’s say that you have a $2000 balance on your credit card, your interest rate is 15% and the minimum monthly payment is $45.

If you didn’t add to your balance and kept up with the monthly payments, here is what you can expect when it comes to paying off your credit card:

  • It would take six years to pay off your balance.
  • You would be paying $937.61 in interest fees. 
  • A total of 68.1% of your payments will go towards paying down the principal.
  • A full 31.9% of your payments will be eaten up by interest fees.

Now, let’s say that you are able to put $5 more towards your balance each month so that you are making $50 monthly payments instead of $45 payments.

You could pay off your debt in 5 years and only pay $789.93 in interest. While $5 may seem like a small amount, it can make a meaningful impact on your credit card debt. 

As you use the credit card calculator and experiment with different payment options and watch the results change, be sure to pay special attention to the percentage of interest vs. principal. These are important numbers. Ideally, you want to see as much money as possible going towards paying down the principal.

Advantages of Paying Down Credit Card Principal

If you’ve been reading along so far, you have probably realized that there are some real advantages to paying down the principal on your credit card by making additional payments or increasing the amount of your minimum payments.

  1. You will pay less in interest. For example, if you have a $500 balance and a 20% interest rate, you will be paying $100 in interest. Reducing your balance to $450 means just $90 in interest. The lower your balance gets, the less you will be putting towards interest.
  2. Shorten the life of your loan. Shortening the length of your loan even by a few months is financially smart, but it also has some real mental benefits. Dealing with financial stress can take its toll. Lifting the weight of credit card debt may offer some much-deserved peace of mind.   
  3. Better overall financial health. If you have maxed out your credit cards, then your credit score is also suffering. Unfortunately, a poor credit score means that you will pay higher interest rates on everything from car loans to insurance premiums. Lowering your credit card balance to around â…“ of your credit limit can boost your credit score and help you save across the board.
  4. Greater ability to negotiate. Once you have made a dent in your principal, you may be able to negotiate a better interest rate with your credit card company. Ultimately, they want your business and if they see that you are making payments on time, you have some leverage when it comes to getting a better rate. If nothing else, it never hurts to ask. 

A credit card payoff calculator is a great tool for gaining greater insight into your finances and helping you plan for the future. Use it to better understand your credit card debt and set reasonable goals for the future.  If you’ve been trying to ignore your debt, a credit card payoff calculator may help bring you some peace of mind. Sometimes simply seeing the payment schedule broken down and having a concrete payoff date in mind is enough to keep you motivated.