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MasterMath

Credit Card Interest Calculator

A 2,000 balance at 24% APR, paying 150 a month, takes 16 months and costs 350 in interest. Raise the payment and watch both numbers collapse.

Currency and number format for

It will take you

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It will take you—
Total interest—
You will pay in total—
On top of the original balance—
Monthly interest—

How this was worked out

    The formula

    monthly interest = balance × (APR ÷ 12) · the rest of the payment clears the balance

    Where it comes from

    Card interest is charged monthly on whatever you still owe. Your payment first covers that month's interest, and only what is left over reduces the balance — which is why a payment barely above the interest charge takes years to get anywhere.

    How to work it out by hand

    1. Divide the APR by 12 to get the monthly rate
    2. Multiply the balance by it: that is this month's interest
    3. Subtract the interest from your payment to see what clears the debt
    4. Repeat with the new balance until it reaches zero

    What is worth knowing

    The lever that matters is the payment, not the rate. On this balance, going from 150 to 200 a month cuts the time from 16 months to 12 and the interest by roughly a third — a bigger effect than any realistic rate negotiation. Two things worth knowing. Interest is normally charged on the average daily balance, so paying earlier in the cycle helps slightly. And if you carry any balance at all, most cards remove the interest-free grace period on new purchases, which means fresh spending starts accruing interest immediately.

    Frequently asked questions

    Why is card interest so expensive?

    Because it compounds monthly on an unsecured debt at rates typically between 18 and 30%. At 24% APR the monthly rate is 2%, which is over 26% a year once compounded.

    Should I pay more than the minimum?

    Always, and by as much as you can. The minimum is designed to keep the balance alive, not to clear it.

    Does the interest-free period still apply if I carry a balance?

    Usually not. Most cards suspend the grace period on new purchases once you carry a balance, so new spending starts accruing interest from day one.

    Is a balance transfer worth it?

    Often, if the fee is lower than the interest you would otherwise pay and you clear the balance within the promotional period. If you do not, the rate afterwards is usually worse than what you left.