Work out how long it will take to repay your credit card with minimum repayments only.
How to use the credit card minimum repayment only calculator
1. Input your credit card balance
Once on the calculator page, the first step is to enter your current credit card balance. This is the total amount of money you owe on your credit card. Make sure this number is accurate, as it will impact the results.
Example: If you owe $5,000 on your card, type "5000" into this field.
2. Enter the annual interest rate
Next, you will need to provide the annual interest rate (APR) for your credit card. This rate is typically found on your credit card statement or through your online credit card account. If you are unsure of the interest rate, check with your credit card provider.
Example: If your credit card has an APR of 19.99%, enter "19.99" into this field.
3. Set the minimum repayment
This step requires you to input the minimum repayment percentage. Many credit card companies calculate your minimum payment as a percentage of the outstanding balance (e.g., 2% or 3%). This percentage can also be found in your card’s terms and conditions.
Example: If your minimum payment is set at 2% of your balance, type "2" in this field.
Alternatively, some credit card companies have a fixed minimum payment, such as $20 or $30. If your card issuer uses this method, you can enter the dollar amount in the provided space for minimum dollar payment instead.
4. View the results
Once you’ve entered all the necessary information, click on the ‘Calculate’ button. The tool will quickly generate results, showing:
- Total interest paid: This is the total amount of interest you will pay if you only make the minimum repayment each month until the balance is paid off.
- Time to pay off debt: This section displays the estimated time it will take to completely pay off your credit card balance if you stick to the minimum repayment.
Example result: If you owe $5,000 with an APR of 19.99% and a 2% minimum repayment, the calculator may show that it will take over 20 years to pay off the debt and cost you thousands of dollars in interest.
5. Explore the impact of increasing repayments
To see how increasing your monthly repayment amount can shorten the repayment period and reduce interest costs, you can experiment by adjusting the minimum payment or entering a higher amount in the fixed repayment section. The calculator will instantly show you how paying more than the minimum can dramatically reduce the interest and time needed to pay off your debt.
Tip: Try entering different repayment amounts to see the savings and time reductions you can achieve by paying more than the minimum required amount.
6. Review and plan
Use the results to help plan your debt repayment strategy. Paying more than the minimum repayment not only reduces the amount of interest you pay over time but also helps you become debt-free faster. The calculator is a valuable tool for visualising how different payment strategies impact your financial health.
Key benefits of using the calculator:
- Clear insight into repayment terms: It reveals the true cost of only making minimum repayments, which is often a shock for many people.
- Encourages larger repayments: The calculator demonstrates how even small increases in repayments can make a big difference in reducing the overall debt.
- Helps financial planning: It provides a clear timeframe for debt repayment, allowing you to plan your finances better.
