Purpose and steps
Each month, interest = current balance × APR / 12; the payment reduces principal after interest. Minimum payment = max(balance × minimum percentage, fixed floor), capped at the final amount due. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Credit card balance, Annual percentage rate (APR), Fixed monthly payment, Minimum payment / balance, Minimum payment floor. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: A fixed payment generally repays debt faster than a minimum that declines with the balance.
- Compare the baseline with a changed scenario: Compare total interest as well as the monthly cash commitment.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Credit card balance | 5000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Annual percentage rate (APR) | 22 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Fixed monthly payment | 250 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Minimum payment / balance | 2 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Minimum payment floor | 25 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
Model-specific method
How this calculator produces its result
Each month, interest = current balance × APR / 12; the payment reduces principal after interest. Minimum payment = max(balance × minimum percentage, fixed floor), capped at the final amount due.
Annuities and the remaining-balance recurrence
A fixed-payment loan is an annuity: the discounted value of all future payments equals the amount borrowed today. Summing that geometric series gives the monthly-payment equation. Match the rate and time unit: monthly payments use an annual nominal rate divided by twelve and a term counted in months.
Each payment is split into interest and principal. Interest uses the opening balance, so paying extra principal now reduces later interest. A zero rate must use P/n rather than the formula’s zero-over-zero form. Keep full precision during the schedule and round only for display; a lender may round each actual posting differently.
P = Σ[t=1…n] M/(1+r)^t M = Pr / (1 − (1+r)^−n) Iₜ = Bₜ₋₁r; Bₜ = Bₜ₋₁ + Iₜ − paymentₜ
- P: principal today
- r: rate per payment period, not the annual percentage
- n: number of payment periods
- M: scheduled payment; B: remaining balance
Worked example
For $5,000 at 22% APR, first-month interest is about $91.67. A $250 payment reduces principal by about $158.33; paying $90 would not cover that month’s interest.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Fixed-payment payoff time
- 26 months
- Fixed-plan interest
- 1,285.72 USD
- Fixed-plan total paid
- 6,285.72 USD
- Minimum-plan payoff time
- 968 months
- Minimum-plan interest
- 43,419.49 USD
- Interest saved vs minimum plan
- 42,133.76 USD
- Months saved vs minimum plan
- 942 months
Reading results without overstating them
- A fixed payment generally repays debt faster than a minimum that declines with the balance.
- Compare total interest as well as the monthly cash commitment.
Assumptions and exclusions
- Assumes no new purchases, fees, rate changes or daily accrual. Issuer minimum formulas vary. An unavailable comparison means its plan does not pay off within the 100-year simulation horizon.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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