Bureau of Wealth

Credit Card Repayment Calculator

By the Bureau of Wealth team Updated

This calculator is general information, not financial advice. Check your own figures with the provider or a qualified adviser before acting on them.

Enter your card balance and APR, then choose a fixed monthly payment, a number of months to clear it in, or the minimum only, to see how long it takes and how much interest you pay.

How do you want to pay?

Your card's minimum payment rule

Plus that month's interest. The FCA requires at least interest, fees and 1% of the balance.

Check the highlighted fields to see your results.

What this calculator assumes

  • You make no new purchases, cash withdrawals or balance transfers on the card while you pay it off.
  • The APR stays the same, and interest is charged monthly at the APR divided by 12 on the balance you carry.
  • The minimum payment is the month's interest plus the percentage of the balance you set, or the lowest minimum payment if that is higher. Your provider's formula may differ, so check your credit agreement or statement.
  • Fees and charges, including late payment and over-limit fees, are not included, and every payment is made on time.
  • A card with several balances at different rates, such as a 0% balance transfer alongside purchases, is treated as one balance at one APR.

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How the calculator works

Each month the calculator adds interest to the balance at the APR divided by 12, then takes off your payment, and repeats until nothing is left. There are three ways to pay. A fixed amount pays the same each month. Clear it by a date finds the level payment that clears the balance in the number of months you choose. Only the minimum works the payment out afresh each month from the balance, so it falls as the balance falls. Whichever you pick, the calculator also runs the minimum-only plan and shows how much interest your plan saves against it.

The FCA minimum repayment rule

The Financial Conduct Authority's rules say a credit or store card provider must set the minimum repayment at no less than the amount that repays the interest, fees and charges applied to your account, plus 1% of the amount outstanding. That is why the percentage in this calculator is added on top of the month's interest. Providers can set a higher minimum, and your agreement may also set a lowest payment in pounds, so enter the formula it shows.

A worked example

Say you owe £3,000 at 24.9% APR and your minimum is interest plus 1% of the balance, with a £5 floor. The first minimum payment is £92.25 and it shrinks as the balance comes down. Paying only the minimum takes 345 months, almost 29 years, and costs £5,998.48 in interest, about twice the original balance. With a minimum of interest plus 2.5%, it would take 161 months and cost £2,437.13.

To clear the card in 24 months you would pay £159.96 a month and £839.14 in interest. A fixed £150 a month clears it in 27 months for £915.95. You can check the 24-month figure with =PMT(24.9%/12, 24, -3000), which returns 159.96.

Persistent debt

Under FCA rules, a provider has to check whether, over the last 18 months, you have paid less towards the balance itself than you have paid in interest, fees and charges. If so, you are in persistent debt, and the provider must contact you, prompt you to pay more and warn that your card may eventually be suspended. If that pattern carries on for a further 18 months, it has to offer you a way to repay the balance in a reasonable period, which the FCA expects to usually be three to four years. If you cannot afford that, the provider must treat you with forbearance, which can include reducing, waiving or cancelling interest, fees or charges.

In the example above, the interest charged each month is more than the 1% that goes towards the balance, which is exactly the pattern these rules look for. If you have balances on more than one card or loan, the debt repayment calculator shows which to clear first and when you will be debt-free.

Frequently asked questions

Why does paying the minimum take so long?

At 1% plus interest, only a small part of each payment reduces the balance, and the minimum shrinks as the balance falls. Paying a fixed amount keeps the same pressure on the balance every month.

What is persistent debt?

It is when, over 18 months, you have paid more in interest, fees and charges than you have repaid of the balance. Your provider must contact you about it and, if it continues, offer you a way to clear the balance in a reasonable period.

Can my card be suspended for paying the minimum?

It can if you stay in persistent debt. The FCA expects providers to generally suspend or cancel the card of a customer they must treat with forbearance, unless doing so would cause significant harm, for example if the customer relies on it for essential living costs.

Does the calculator include new spending?

No. It assumes the balance only goes down. Anything new you put on the card pushes the payoff date back and adds interest.

Where can I get help if I am struggling?

Talk to your card provider as early as you can, before you miss a payment. You can also get free, confidential advice from a debt adviser, which MoneyHelper's debt advice locator can help you find.

Sources

Figures come from institutions millions of people rely on. How we keep calculators accurate.