Saved by paying fixed vs minimum
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Minimum payments only
Payoff time
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Interest: —
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Fixed monthly payment
Payoff time
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Monthly: —
Interest: —
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Pay off in target time
Required payment
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Target: —
Interest: —
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Balance over time — all three scenarios
Minimum payments barely dent the balance for years. The difference is dramatic.
Frequently asked questions
Why do minimum payments take so long?
Minimum payments are typically 1–3% of your balance, which means the payment shrinks as the balance drops. At 22% APR, roughly 1.8% of your balance is pure interest each month. A 2% minimum payment leaves almost nothing for principal. It's mathematically designed to keep you paying interest as long as possible.
What's the fastest way to pay off credit card debt?
Pick the highest fixed monthly amount you can sustainably afford — and commit to it regardless of your balance going down. Every dollar above the minimum payment saves roughly $2–4 in future interest. Even $50–100 extra per month can cut years off your payoff timeline and save thousands in interest.
Does a balance transfer make sense?
A 0% balance transfer card can be powerful if you can pay off the balance before the promotional period ends (typically 12–21 months) and if the transfer fee (usually 3–5%) is less than the interest you'd pay otherwise. At $8,500 on a 22% card, you'd pay ~$935 in the first year on interest alone — far more than a 3% transfer fee of $255.
How does credit card interest actually work?
Credit cards compound interest daily. Your APR is divided by 365 to get a daily periodic rate. Each day, interest accrues on the previous day's balance. A 22.99% APR is a daily rate of about 0.063% — which compounds to more than the stated APR over a year. This is why the effective annual rate (EAR) on a 22.99% APR card is actually about 25.8%.