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Calculate The Required Monthly Payment to Pay Off Your Credit Cards Fast

Credit Card Pay Off Goal Calculator

Want to pay off your credit cards early? Use this free credit card repayment calculator to find out how long it will take you to pay off your debt with current payments, and how much you'd be required to pay monthly to eliminate credit card debt sooner.

Card Details Amount
Current Card Balance: ($)
Current Monthly Payment: ($)
Annual Interest Rate: Compare to Columbus HELOC Rates (%)
Payoff Goal: (Months)

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Our rate table lists current home equity offers in your area, which you can use to find a local lender or compare against other loan options. From the [loan type] select box you can choose between HELOCs and home equity loans of a 5, 10, 15, 20 or 30 year duration.

Make a Plan to Eliminate Credit Card Debt

Credit card debts can strangle your personal finances. With interest rates averaging just over 13 percent, you are likely to pay the highest interest rates on your credit cards than on any other debts you carry. Some credit cards can charge rates as high as 29.99 percent.

At least half your minimum payment goes toward interest. In fact, if you only make the minimum monthly payment toward your credit cards, you will only be paying down about 1 percent of your principle. At that rate, you could spend years and thousands of dollars paying off your credit cards, tying up your finances each month when they could be put toward more productive goals, such as creating a down payment for a home or investing in high-yield assets.

By paying off your credit cards as quickly as possible, you can re-invest your money to make it work for you.

“Compound interest is the 8th wonder of the world.  He who understands it, earns it; he who doesn’t, pays it.”
- Albert Einstein

Avoiding the Minimum Payment Trap

Credit cards offer revolving credit, which might make you feel like there’s no need to pay it off. After all, you might want to use the credit cards to make a purchase, and then you’ll just have a new balance, and the process will repeat itself over and over again. Why not just pay the minimum so you can free up your money for other things you want to do?

Mission Statements.

The problem is that you’ll continue to pay interest and only slowly pay off the principal if you only make the minimum payments. If you continue to use your credit cards you grow the balance further and compound interest. Even if you stop using your cards, you’ll only chisel away at your debt by paying the minimum each month. You’ll end up paying much more than you need to by the time the debt is settled, and you’ll take so long to pay it off that your finances will be paralyzed and you won’t be able to work toward other financial goals.

Working to Make a Bank Rich While Staying Broke

Consider this scenario: You have $6,270 in credit card debt (right around the national family mean according to the 2019 Survey of Consumer Finances by the Federal Reserve), and you pay a 16.43 percent interest rate (average among cards assessed interest in August 2020). If you pay a minimum payment of $86 a month, it would take you 38 years and ten months to pay off your debt. You’ll also pay $33,806.00 in interest.

That’s almost 39 years that you’ll have $86 of your money tied up each month. That’s 39 years that you won’t be able to use that credit card just so you can actually pay off your balance.

If you wanted to pay that card off in 2 years you would need to increase your monthly payment by $222.29 to $308.29. This would have you pay $1,128.92 in interest while saving you $32,677.08 in interest expenses.

Meeting Your Financial Goals

To gain financial freedom, you’re going to have to pay down those credit card debts as quickly as possible. Before you can determine the right amount to pay each month, you need to set a goal for your payoff date. You can use our free calculator to determine how much you would need to pay each month in order to meet the goal. If the payment is too much, you can readjust your payoff date until you find the right balance between a payment that meets your monthly budget and a payoff date that meets your financial goals.

Equivalent Rate of Return After Income Taxes

Any extra payment you make on your card goes directly to principal, which can save you a lot of interest that no longer accumulates over the years. And unlike income which is taxed, money not needlessly spent on interest goes untaxed. If you are at a 37% marginal tax rate you would need to earn a 26.08% rate of return on investments taxed as ordinary income to earn as much as you make by applying the funds to paying off a 16.43 percent interest credit card sooner.

The formula for the above quote is: R = i / (1 - tr)

  • R = Tax-equivalent return
  • i = rate of interest
  • tr = tax rate

R = 16.43% / ( 100% - 37%) = 26.08%

Strategies to Manage Excessive Credit Card Debt

  • Balance Transfer Credit Cards: Credit card companies may offer low-rate introductory periods which allow you to pay lower interest rates on balance transfers for a period of 3 to 12 months.
  • Other Unsecured Debt: personal loans typically charge lower interest rates than credit cards.
  • Secured Debt: Homeowners may decide to consolidate their debts by taking out a second mortgage structured as either a HELOC or a home equity loan. A cash out refi can also make sense to help them lower their monthly interest payments. This idea only works if you are confident you will be able to make these payments and will not run up credit card bills once again. When the debt is tied to your house defaulting puts you at risk of foreclosure.
  • Credit Counseling: Nonprofit consumer credit counseling services are available to help consumers determine which decision makes the most sense for them. Some of these services will also offer to negotiate with creditors to lower interst rates or help you consolidate debts into a lower-rate loan.

Go From Paying Interest to Earning Returns

Once you have a plan in place for paying off your credit card debt, you can use our investment calculators to determine how much money you can make by putting that previous credit card payment toward an annuity, CD or other investment. You can use the money to put together a big down payment for a home, to buy a vacation home, or to plan for your retirement.

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