Card interest compounds against you. This guide shows the math, a payoff example and the Excel formula.
Updated November 2026
How card interest works
Credit card interest is quoted as an APR, an annual rate. Issuers apply a daily or monthly periodic rate to your balance. For planning, dividing the APR by 12 gives a good monthly estimate. Interest is added to the balance, so unpaid interest also earns interest. Our credit card interest calculator shows the payoff time and total cost for any balance.
First-month interest
On a $5,000 balance at 22 percent APR the monthly rate is 22 / 12 = 1.8333 percent. First-month interest is $5,000 x 0.018333 = $91.67. If your payment is $200, only $108.33 reduces the balance. If your payment were $91 or less, the balance would never fall.
How long to pay off
With a fixed payment P, balance B and monthly rate i, the number of months is:
For $5,000, 22 percent and $200 a month, n is about 33.7, so it takes 34 payments (2 years 10 months). Total interest is $1,749.88 and you pay $6,749.88 in all.
Excel formulas
The NPER function does this directly: =NPER(0.22/12,-200,5000) returns about 33.7. Total interest is =200*ROUNDUP(NPER(0.22/12,-200,5000),0)-5000 as an approximation, slightly high because the last payment is smaller. For the exact figure build a month-by-month table, or use our amortization schedule.
What a bigger payment does
Raise the payment to $300 and the same balance clears in 21 months instead of 34, and interest falls from $1,749.88 to $1,021.60. Paying a little more each month saves a lot because every dollar cuts the balance that interest is charged on.
Ways to cut the cost
- Pay more than the minimum, and pay as early in the month as you can.
- Ask the issuer for a lower rate. It does not always work, but it costs nothing.
- Look at a balance transfer. Test the fee against the interest saved with the balance transfer calculator.
- See what minimum-only payments cost in the minimum payment calculator.
The CFPB publishes plain-language credit terms and definitions if you want to check what a term on your statement means.
These are illustrations to help you plan, not financial advice.
Frequently asked questions
How do I calculate credit card interest?
Divide the APR by 12 and multiply by the balance. At 22 percent on $5,000 that is $91.67 for the month.
How long will it take to pay off my card?
Use n = -ln(1 – B x i / P) / ln(1 + i), or =NPER(rate/12,-payment,balance) in Excel.
Why does my balance barely fall?
If the payment is only a little above the monthly interest, almost all of it goes to interest.
Do daily and monthly interest differ?
Slightly. Issuers often compound daily, so the true cost is a little higher than the monthly estimate.