How to Use the Credit Card Repayment Calculator

Enter your current credit card balance and annual purchase interest rate. Then enter the amount you plan to repay every month.

If you want to see how making a larger repayment could affect your debt, enter an additional amount in the Extra monthly repayment field.

You can also enter a recurring monthly card fee where applicable.

The calculator estimates:

• How long the credit card balance may take to repay;
• Your total monthly payment;
• Total estimated interest;
• Total card fees;
• Total amount repaid;
• An estimated debt-free date;
• Interest saved by making the additional repayment;
• Time saved by making the additional repayment; and
• A year-by-year repayment schedule.

How Does Credit Card Interest Work?

Credit cards generally quote an annual interest rate, but interest may be calculated more frequently under the card provider’s terms.

For this calculator, the annual interest rate is converted into a simplified monthly rate:

The monthly repayment is then applied against estimated interest, fees and the outstanding balance.

Actual credit card providers commonly calculate interest using daily balances and specific statement-cycle rules, so actual card interest may differ from this simplified estimate.

Credit Card Repayment Example

Why Can Credit Card Debt Take So Long to Repay?

Credit card interest rates can be considerably higher than many secured loan rates. When repayments are relatively small, a significant part of each payment can initially go toward interest rather than reducing the principal balance.

If the repayment barely exceeds the interest and fees charged each month, the balance may decline very slowly.

This is why the amount you repay can have a substantial effect on the overall cost and repayment time.

What Happens If My Payment Is Too Low?

For a credit card balance to reduce, the payment generally needs to be greater than the interest and fees being added to the balance.

For example, if estimated monthly interest and fees total $100 and you only repay $90, the outstanding balance would increase rather than decrease, assuming no other adjustments.

How Can Paying More Reduce Credit Card Interest?

When you make a larger repayment, more money can be applied toward reducing the outstanding balance.

A lower balance means less principal remains on which future interest can be calculated.

This can create two benefits:

• The balance may be repaid sooner; and
• Total interest paid may be lower.

The extra repayment comparison above estimates both effects.

What Is a Credit Card Minimum Repayment?

A credit card statement generally specifies a minimum amount that must be paid by the due date.

The method used to determine the minimum payment can vary by card issuer and product. It may involve a percentage of the balance, a minimum dollar amount, fees, interest or other components.

For this reason, this calculator does not assume one universal Australian minimum-repayment formula. Instead, you enter the actual monthly amount you intend to pay.

Is Paying Only the Minimum Repayment Expensive?

It can be. A relatively small payment can mean the balance remains outstanding for a long period, which can substantially increase the amount of interest paid.

Paying more than the required minimum, where financially appropriate, can generally reduce the outstanding balance more quickly.

Before changing your repayment strategy, consider your overall financial position and other financial obligations.

What Is a Credit Card Interest-Free Period?

Some credit cards offer an interest-free period on eligible purchases when statement balances are paid according to the card’s terms.

Whether an interest-free period applies can depend on factors including:

• Whether the previous statement balance was paid in full;
• The transaction type;
• The date of the purchase;
• Statement-cycle timing; and
• The credit card provider’s conditions.

This calculator assumes interest applies to the outstanding balance at the annual rate you enter and does not model interest-free periods.

Purchase Rate vs Cash Advance Rate

Credit cards can apply different interest rates to different types of transactions.

Purchase interest rate

This is generally the rate applied to eligible purchases when interest is payable.

Cash advance interest rate

Cash withdrawals and certain cash-equivalent transactions may attract a different rate and may not qualify for the same interest-free period as purchases.

This calculator models one interest rate at a time. If your balance contains transactions at multiple rates, the result is only an approximation.

Does This Calculator Include New Purchases?

No. The calculator assumes you stop adding new purchases, cash advances and balance transfers to the card.

If you continue using the card while trying to repay it, the balance may take longer to repay than the calculator indicates.

What About Balance Transfers?

A balance transfer moves eligible credit card debt to another credit card, often with a promotional interest rate for a limited period.

Balance transfers may involve:

• A promotional interest rate;
• A balance transfer fee;
• A limited promotional period;
• A different interest rate after the promotional period;
• Different rates for new purchases; and
• Eligibility conditions.

This calculator does not model promotional balance-transfer periods or multiple simultaneous interest rates.

Does Closing a Credit Card Affect the Balance?

Closing or cancelling a credit card generally does not eliminate the amount already owing. Any remaining balance normally still needs to be repaid according to the card provider’s terms.

If you are considering reducing available credit limits, cancelling a card or consolidating debt, consider the contractual and financial implications before making changes.

Credit Card Repayment Calculator Assumptions

This tool makes several simplifying assumptions:

• No new purchases are added to the card;
• No cash advances are made;
• No balance transfers are added;
• The interest rate remains constant;
• The selected repayment amount is made every month;
• The optional extra payment is made every month;
• The entered monthly fee remains constant;
• Interest is simplified to an annual rate divided by 12;
• No interest-free period is applied;
• No late-payment fees are included unless entered as part of the monthly fee;
• No promotional interest rates are modelled; and
• Results are estimates rather than credit-card issuer statements.

Related Finance Calculators