# Credit Card Payment Calculator

Created by Tibor Pál, PhD candidate
Reviewed by Dominik Czernia, PhD and Jack Bowater
Last updated: Sep 28, 2023

The credit card payment calculator is a handy device to compute the monthly payments on your credit card balance. You can apply this tool to estimate monthly payments by specifying your payback term, payoff date, or if you would like to know the minimum required monthly payments. Please check out our credit card calculator and credit card minimum payment calculator to understand more.

Read further, and we show you how to calculate credit card payment and how to use the credit card monthly payment calculator.

## How do credit card payments work?

It is always crucial to understand the costs and expenses of a financial service before you sign an agreement. Because of the relatively high interest rates and potential penalties, grasping how credit card payment is calculated and how each payment goes toward reducing the balance on your credit card is of particular importance.

Unlike a mortgage or an auto loan, paying off a credit card doesn't follow a predetermined credit card amortization schedule, so you are relatively flexible in planning how to pay off credit card. The drawback of such flexibility is that you can quickly run into considerable credit card debt.

## How to calculate credit card payments?

So, how to pay down credit card debt, and how to pay off a credit card fast?

It is essential to reduce the principal balance as fast as possible to avoid excessive credit card interest charges or penalties. This way, as you proceed with the payments, the interest is computed on a smaller and smaller amount, so you end up paying less overall. Now, let's see the three essential steps to make things more straightforward.

1. The Minimum Payment

In general, credit card providers set a minimum monthly required payment, which is typically low. The less you pay, the larger the part of the payment that is devoted to the monthly interest charges, and so your balance goes down relatively slowly. For example, let's say your card issuer requires you to pay 3 percent of your outstanding balance. If you owe 1,000 dollars on your credit card, the minimum payment is 3 percent of the 1,000 dollars, which is 30 dollars ($1000 × 0.03 =$30).

2. Interest

Typically, when you make a payment, your credit balance doesn't decrease by the same amount. Instead, credit card issuers allocate part of your payment to cover interest charges accrued in the given billing cycle. For example, if the interest rate, or APR, is 12 percent, the applied monthly interest rate is 1 percent (12% / 12 = 1%). Taking the 1,000-dollar balance, it means that from a 30-dollar minimum payment, 10 dollars ($1,000 × 0.01 =$10) goes to cover the monthly interest charges. You can use our APR calculator to facilitate this calculation.

Note that card issuers might charge interest daily, which means that interest is added to your balance on each day. In this case, you need to convert the annual rate into the daily periodic rate (12 / 365 = 0.0329%) and repeat the process for each day of the month. Because of compound interest, the interest charge will be larger at the end of the month.

3. Principal

Finally, you can quickly compute the amount by which you reduce your credit card debt in a month. You need only to deduct the 10 dollars interest from the 30 dollars payment ($30 −$10 = $20). In this way, assuming there is no other fee or expenses, you can bring down your 1,000 dollar balance to 980 dollars, which will be the base of the interest calculation in the following month. ## How to use the credit card monthly payment calculator? For the first step, you need to specify in what context you would like to estimate your monthly payments: • Monthly payment with specified payback term; • Monthly payment with specified payoff date; or • Monthly payment with required minimum payments. Afterward, in the specification, you need to set the following parameters. • Credit card balance — your outstanding unpaid balance. • Due date — the closest date by which you need to make a monthly payment, and the charged interest is added to your balance. • APR — the annual percentage rate or yearly interest rate. • Payback within — the desired payback term (only available for desired payoff term). • Desired payoff date — you can set here the date by which you would like to repay the credit (only available for the desired payoff date). You will receive the following results immediately when you set all the above parameters. • Repayment details You can learn here what is your monthly payment, how long it takes to pay off your credit, what is the total payment amount, and the charged interest. • Balances Here, you can check what is a credit card balance at a given time, as well as the interest and the principal amount you paid through the repayment term. • Payment schedule The payment schedule shows you the opening and closing balances each month, together with the monthly payments, broken down into principal and interest parts. In the advanced mode, you can set the parameters for the minimum monthly payment requirements and the calculation method the credit card issuer applies. ## Disclaimer You should consider the credit card payment calculator as a model for financial approximation. All payment figures, balances, and interest figures are estimates based on the data you provided in the specifications that are, despite our best efforts, not exhaustive. For this reason, we created the calculator for instructional purposes only. Yet, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice. Tibor Pál, PhD candidate What are you looking for? Monthly payment with... specified payback term Specifications Credit card balance$
Due date
APR
%
Payback within
yrs
mos
Monthly payment details
Your monthly payment is $91.74, and you will pay off the credit in 1 year(s), on Aug. 29, 2024, The total payment amount is$1,100.91, with an interest payment of \$100.91.
Display
Chart of balances
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