Making only the minimum payment on a credit card balance is one of the most expensive financial habits you can have, and most people don’t realize just how long it actually takes to clear a balance this way. Because credit card interest compounds daily on most cards, a large chunk of every minimum payment goes straight to interest rather than actually reducing what you owe — which is why a credit card payoff calculator is often eye-opening the first time you use one.
The good news is that even modest extra payments can cut years off your payoff timeline and save you hundreds or thousands in interest. Comparing a fixed extra-payment strategy against your current minimum payments shows exactly how much faster you could be debt-free, and it’s a useful exercise alongside checking your overall debt-to-income ratio if you’re carrying multiple types of debt.
Before deciding how aggressively to pay down your balance, see your real payoff timeline with our free credit card payoff calculator. If student loans are part of the picture too, our student loan calculator can help you prioritize which debt to tackle first.