How to read a credit card payoff estimate

How credit card interest works

Your APR is a yearly rate. Most issuers divide it into a daily rate and apply it to your average daily balance over the billing cycle. A $5,000 balance at 24% APR costs roughly $100 in interest in a 30-day month.

Lowering your balance earlier in the month, or keeping it lower for more days, generally lowers that month's interest.

How minimum payments work

Minimums are often a small percentage of the balance plus interest. As the balance shrinks, the minimum shrinks too, which is why paying only the minimum can stretch payoff out for years.

Reading your estimate

• Payoff date: when the balance is projected to reach zero if nothing changes.
• Total interest: what the plan is projected to cost on top of the balance.
• Month-by-month view: shows when each debt is cleared and freed-up money rolls forward.
• Comparison to minimums: shows the difference your plan makes versus paying minimums only.

Update the numbers whenever your income, rates or spending change. Every result depends on your income, interest rates, card terms and payment behavior. Nothing here guarantees a payoff date or a credit score change.

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