Debt-free date
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Why minimum payments keep you in debt
Credit card minimum payments are deliberately designed to keep balances large for as long as possible. A typical minimum is 1–3% of your outstanding balance, which means the minimum shrinks as your balance shrinks — keeping you paying for decades. On a $5,000 balance at 20% APR, paying only minimums can result in over 20 years of payments and more interest paid than the original debt.
Interest on credit cards is calculated daily. Your APR is divided by 365 to get a daily rate, then multiplied by your average daily balance. On a $5,000 balance at 20% APR, you're accruing approximately $2.74 in interest every single day — about $83 per month. If your monthly payment is $100, only $17 is actually reducing your debt.
The most powerful thing you can do is pay a fixed amount above the minimum every month. Unlike the minimum (which shrinks with your balance, extending your timeline), a fixed payment accelerates payoff dramatically as your balance falls. Even an extra $50 per month can cut years off your debt and save thousands in interest.
If you carry balances on multiple cards, the avalanche method minimises total interest: pay the minimum on every card, then put every extra dollar toward the card with the highest APR. Once that's paid off, redirect everything to the next highest-rate card. This calculator helps you model each card individually so you can build your attack plan.