Credit Card Debt-Free Repayment Calculator

By   |   Updated 13 Sep 2024

Find out just how long it would take to pay off your credit card if you change your repayments.

Thinking of switching cards to lower your payments? Start comparing balance transfer credit cards or the balance transfer saving calculator!

Credit card debt-free calculator

Enter your card balance, the annual interest rate and the target of when you would like to be debt-free.

How you can become credit card debt free

Sarah, a Melburnian who had racked up $3,482 on her credit card over a few years. Her desire to get out of credit card debt was serious, but it had no focus because she didn't have goal.

On her card's monthly payment due date, Sarah never knew how much she ought to pay off. The interest rate was 16% p.a. How long would it take her to be debt-free if she paid off $200 every month? Or, if she wanted to clear her debt before her wedding, 15 months ahead, how much would her monthly repayment need to be?

Having no idea, she usually made just the minimum repayment of around $70. Her plan without a specific goal was just a wish, and at $70 per month, it would have taken her nearly seven years to clear the debt.

Things changed for her when she discovered our credit card debt calculator. When she entered a repayment of $200 per month, the tool calculated that she would be debt-free in 20 months. That was good, but not good enough. So, she recalculated by entering 15 months of repayment as her specific goal.

The answer: repay $257.66 per month. Now, she has a plan to get out of debt!

This case study is intended as a representative example.

Citi Rewards Card Balance Transfer and Purchase Offer

On Citi's website

This product is provided by National Australia Bank Limited, using certain trademarks under license from Citigroup Inc.

Citi Rewards Card Balance Transfer and Purchase Offer

Highlights

  • 0% p.a. for 15 months on purchases and balance transfers. Balance transfer reverts to cash advance rate.
  • Complimentary mobile phone insurance when you pay your monthly mobile plan bill with your Citi Rewards Credit Card . See Terms and Conditions here.
  • Earn up to 1 Citi reward point for every $1 spent.

Pros

  • 0% p.a. on balance transfers and purchases for the first 15 months.
  • No balance transfer fee.
  • Earn up to 1 Citi reward point for every $1 spent.
  • 10% off Limited Time LUX Exclusive hotel offers (up to $250 per booking) booked by 1 March 2025.

Cons

  • Balance transfer changes to a 22.24% p.a. cash advance rate after 15 months.
  • Fee for an additional card is $90.

Tips for paying off credit card debt faster

Here are 7 top tips from our credit card experts to help you pay off credit card debt faster—don't be like Peter Griffin and keep ignoring your debt!

  1. If you're struggling to repay your debt, stop using your credit card. Pay cash instead, and buy only what you can afford.
  2. If you have debt on multiple cards, determine which one has the highest interest rate and concentrate on repaying that debt first.
  3. Consider consolidating your debts by applying for a new card with an introductory 0% interest offer on balance transfers. Preferably, choose a lower-than-average revert interest rate if you can't repay your debt in full before the offer's expiry date.
  4. Set a repayment goal by using our Credit Card Debt Calculator to work out the monthly repayment required to clear your debt in your chosen number of months.
  5. Organise a direct debit to make the required monthly repayment from your bank account.
  6. Make a budget showing your monthly income, essential expenditures, occasional treats, and your credit card repayment. Try hard to stick to it.
  7. If you have credit card debt, don't keep money in a savings account. You're paying a far higher interest rate on your debt (possibly as much as 20% p.a.) than you are earning on your savings (maybe 3% p.a.). Use your savings to pay down your debt. When your debt is cleared, you can start saving again!

Help using our credit card debt calculator

Questions our customers have regularly asked about our credit card debt-free calculator.

  • FAQs

How is the minimum monthly repayment calculated?

Minimum monthly repayments are calculated as a percentage of your closing balance (e.g. 2%) or a fixed amount (e.g. $20), whichever is the greater.

So on a debt of $5,000 with an interest rate of 18% p.a. (1.5% per month) and a minimum monthly repayment of greater than 2% or $20, the first month's repayment would be $101.50 (2% of $5,075, the new balance after interest charges).

The balance at the beginning of the second month would be $5,075 minus $101.50 = $4,973.50. This is slightly less than the original amount of $5,000, so the next month's 2% repayment would be slightly lower.

The repayment amount would decline slightly every month until it reached a point about 30 years later where the 2% calculation would produce a figure of less than $20. From then on, the $20 minimum repayment would apply until the loan was repaid in full.

Why is it a bad idea to make only the minimum monthly repayment?

The minimum monthly repayment does little more than cover interest charges plus a slight reduction in the debt. In the $5,000 debt / 18% p.a. interest / 2% monthly repayment example, the first month's repayment of $101.50 is mostly swallowed up by interest of $75. This ratio of interest charges to debt reduction is maintained throughout the life of the debt if you make only the minimum monthly repayment amount, which declines as the debt is very slowly reduced.

But if you were to keep on paying $101.50 – 2% of the original debt – you would clear your debt much more quickly, in less than eight years instead of 33 years. That's because a steadily growing proportion of the fixed repayment amount goes towards debt reduction as the debt amount declines.

How long will it take to repay a credit card debt of $5,000 if I make only the minimum monthly repayments?

It depends on your card's interest rate, the minimum monthly repayment percentage, and whether you add to the debt with new purchases.

If your interest rate were 18% p.a. and the minimum monthly repayment 2%, it would take an astounding 33 years to repay your debt, even if you didn't add to it with new purchases. And you would have paid $12,181 in interest by the time the debt was paid off.

Your monthly credit card statement will show how long it will take to pay off your current debt amount if you make only the minimum monthly repayments.

I have debt on two credit cards. Should I pay off the same amount each month on both of them?

It depends on whether they both have the same interest rate. If they do, it doesn't matter which one you repay faster. You could pay off the same amount on both or make just the minimum repayment on one and concentrate on making bigger repayments on the other to clear at least one debt more quickly.

But if the interest rates are different, make only minimum repayments on the lower-interest card and pay off as much as you can afford each month on the higher-interest card. Once the higher-interest debt is repaid in full, you can switch your extra repayments to the lower-interest card. By using this strategy, you'll pay less interest and be debt-free sooner.

I've used the Credit Card Debt Calculator to work out how much I need to pay per month in order to clear my debt in five years. How can I make sure I stick to the plan?

First of all, try to avoid adding more debt to your card. You have already lost your monthly interest-free days, which are forfeited when you have any unpaid debt on your card. This means that interest would be charged on each new purchase from the actual transaction date. New purchases, plus the extra interest charges, are only going to add to your debt and make it harder to repay.

Secondly, set up a direct debit from your bank account to pay off the amount indicated by the Credit Card Debt Calculator. This could be a single monthly payment, or fortnightly payments (divide the amount by two), or weekly payments (divide the amount by four), depending on how often you are paid. This will reduce your opportunities to spend the money you should be using for repayments.