Breakdown
How it works
Card interest is charged monthly on the outstanding balance at APR ÷ 12. A fixed payment clears the debt in a predictable time; a percentage-based minimum payment shrinks as the balance falls, stretching repayment over many years and multiplying the interest.
Formula
Worked example
5,000 at 24.9% APR paying 200 a month: cleared in 36 months with about 2,100 interest. Paying only the 2.5% minimum (floor 25) takes nearly 39 years and costs over 20,000 in interest.
Frequently asked questions
Why does the minimum payment take so long?
Because it falls as the balance falls, so you keep paying mostly interest. Fix your payment at the first month's amount and never let it drop.
Should I use a 0% balance transfer?
Usually yes if you can clear the balance within the 0% period. Fees are 2–4% of the balance. Divide the balance by the number of 0% months and pay that every month.
Avalanche or snowball?
Pay the highest-APR card first (avalanche) to minimise interest; pay the smallest balance first (snowball) if you need quick wins to stay motivated. Use the debt payoff calculator to compare.
Does my payment cover the interest?
The calculator warns you if not. Monthly interest = balance × APR ÷ 12. On 5,000 at 24.9% that is 104 — any payment below this grows the debt.