Credit Card Debt

As unsecured, revolving debts your credit card debt payments can vary widely based on how much you owe and how quickly you intend to pay the balance off. Whereas paying the minimum payments due on your credit cards could have you paying off a debt for the next few decades, paying a fixed payment on the same debt could have it paid off in just a few years. Determining the best way to pay back your credit card debts is essential to maintaining a strong financial outlook.

Solutions Debt Calculator

Credit Card Information

*Current Balance:

*APR (annual percentage rate):

Payment Option #1: Minimum Payment Only

This option estimates how long it will take to pay off your credit card balance if you plan to make the minimum monthly payments only:

Minimum monthly payment calculation:

Based on the information provided, your first minimum monthly payment is $0.00. Note your minimum payment decreases as you pay down your credit card balance.

Payment Option #2: Minimum Payment Plus

This option estimates how long it takes to pay off your credit card if you commit to paying a set amount in addition to the minimum payment. With this option you commit to paying the minimum monthly payment due plus a set amount extra each month.

For example: minimum payment + twenty dollars

Additional monthly payment:

First minimum monthly payment:

Total first monthly payment:

Payment Option #3: Fixed Payment

This option estimates how long it takes to pay off the credit card balance if you commit to paying a fixed amount each month. This means you set the amount you pay and do not change the amount as you pay your bill down.

For example: pay $300 each month

*Your fixed payment must be greater than or equal to your first minimum monthly payment.*

*Fixed monthly payment:

Note: Federal regulations require credit card issuers to disclose on your credit card statement how long it will take to pay off your estimated balance if you make minimum monthly payments. Estimates may be rounded up to the next $100. This debt calculator uses your actual credit card balance, so the results may vary from the estimate shown in your credit card statement.

Minimum payments versus fixed payments

In general you have two choices when it comes to paying back a credit card debt:

You can pay the minimum payment due on each monthly bill, OR
You can commit to paying a fixed amount each month.

The first option will generally have you paying back a debt for decades. You don’t really make any progress in paying down the principal from one month to the next. The “principal” is the original amount of the debt incurred—i.e. the dollar amount you originally charged on your credit card when you made your purchase. Even just a $1000 debt on a credit card with 18% APR could take you almost a decade to pay back if you paid only the minimum payments required.

On the other hand, if you organized your finances to pay $50 every month on the debt no matter how low the minimum payment gets, you can have the same credit card paid off in just two years. In this light, paying more than the minimum amounts due on your credit cards can give you a big return financially on down the road.

Paying more with interest

The other advantage to paying your debts off faster is that you end up paying less overall. Each month that your debt payment comes due, interest is assessed based on your total balance for that month. If you take longer to pay your debt off, you’re giving the interest that many more chances to compound your debt.

Using the same $1000 balance on an 18% APR credit card example we used above, paying the minimum payments will equal a total interest paid of $923.12 (assuming your minimum payments can be no less than $15 per month). You just paid almost as much as the original debt in interest, meaning you effectively doubled the cost of your $1000 item. On the other hand, you only pay $197.83 in interest if you pay the debt off in 2 years with $50 fixed payments.

What to do if you need help

If you use the credit card debt calculator and simply can’t live with the number you see, give us a call at 1-888-294-3130 to speak with a certified credit counselor. They can help assess your budget to help you free up more money to pay off your credit card debts, plus offer possible solutions if you’re having trouble with too much credit card debt. The consultation is free of charge, so you can get the advice and professional assistance you need without adding to your financial troubles with another bill.