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Escape the toxic debt spiral. Expose exactly how much you are losing to compounding interest and calculate the fastest mathematically possible payoff date. This free online tool allows you to calculate credit card payoffs quickly and accurately. No sign-up or installation required.
Of all the financial products in existence, credit card debt is arguably the most destructive to personal wealth. Unlike a mortgage (which charges 5% interest to buy an appreciating house), a credit card usually charges a blistering 20% to 30% APR to finance rapidly depreciating consumer goods.
Credit cards are inherently dangerous because they use Revolving Compound Interest. Unlike a standard loan where interest is charged on a fixed schedule, credit card companies calculate your interest on a daily basis. If you do not pay off the balance in full at the end of the month, the unpaid interest is added to your core balance, meaning the next day you will literally begin paying interest on the interest. It is a mathematical death spiral.
The most dangerous line on your monthly credit card statement is the "Minimum Payment Due." This number is not designed to help you get out of debt—it is mathematically engineered by the bank's algorithms to keep you in debt for as long as legally possible.
Banks generally calculate the minimum payment as just 1% or 2% of your total balance, plus the interest charged that month. This means that if you only pay the minimum, roughly 80% to 90% of your money goes straight to the bank's profit margins, and only a tiny fraction touches the actual principal balance.
If you have a $5,000 credit card balance at 24% interest, and you only make the minimum payment of $120, it will take you over 8 years to pay it off, and you will pay an agonizing $6,000 in pure interest. You will pay for the initial purchase more than twice over.
To escape credit card debt, you must launch an aggressive counter-attack. The only way to stop daily compound interest is to radically increase your monthly payment to shrink the principal balance as fast as humanly possible. By using our calculator, you can instantly see how throwing an extra $100 or $200 a month at the card will slash years off your payoff date and save you thousands of dollars in toxic interest.
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