How long to pay off $5,000 on a credit card

The first month

A card at 24% APR charges about 2% of the balance each month. On $5,000 that is $100 of interest in the first month. Pay $100 and the balance never falls: every payment covers only the interest. This is why card statements in the US have carried a minimum-payment warning since the Credit CARD Act of 2009.

Four payments compared

At $150 a month the $5,000 is cleared in 56 months, almost five years, and costs $3,322.09 in interest.

At $250 a month it takes 26 months and $1,449.36 of interest.

At $400 a month it takes 15 months and $811.97 of interest.

Going from $150 to $250, two-thirds more per month, cuts the time by more than half and the interest by more than half. Every dollar above the interest goes straight to the balance, so the effect is much bigger than the size of the increase.

How the calculation works

Each month the card adds interest of balance × APR ÷ 12, then the payment comes off. The number of months has a closed form, n = −ln(1 − r × B ÷ P) ÷ ln(1 + r), with r the monthly rate, B the balance and P the payment; the credit card payoff calculator uses it and also prints the month-by-month balance. Real cards compound daily and change the minimum as the balance falls, so a statement can differ by a few dollars, but the shape is the same.

Ways to pay less interest

Pay a fixed amount rather than the shrinking minimum. Pay more than once a month if your card charges daily interest. If you have several cards, put every extra dollar on the highest APR while paying the minimum on the rest (the avalanche method), or on the smallest balance first if quick wins keep you going (the snowball method). A balance transfer at 0% can help if the fee is small and the balance is cleared before the offer ends; work out the payment needed with the calculator's months mode.

Stop the balance growing

None of this works if new spending goes on the card. Move day-to-day spending to a debit card while the balance is being paid off, and keep a small emergency fund so an unexpected bill does not go back on the card.

Interest compared with the balance

At $150 a month the interest paid ($3,322.09) is two-thirds of the original $5,000 balance. At $400 it is about one-sixth. Seen that way, a higher payment is not just faster; it is cheaper by thousands. If the larger payment is not possible every month, set the minimum to a comfortable fixed amount and add one-off extras when you can.

When a loan can help

A personal loan at a lower fixed rate can replace card debt and give a fixed end date, which helps if the card balance keeps drifting. Compare the loan's APR and fees with the card's, use the credit card payoff calculator for the card and the loan calculator for the loan, and close or put away the card so the balance does not build up again.

In short

At typical card rates, paying only the interest-sized minimum keeps a balance alive for years. Choose a fixed payment well above the first month's interest, put extra money on the highest rate first, and stop adding new spending to the card. Re-run the numbers whenever the payment or the rate changes, so the payoff date stays real. If you cannot reach a payment above the interest, a non-profit credit counseling service can help negotiate a plan with the card issuer.