Why credit card debt is so expensive
Credit cards compound interest monthly at APRs of 20% or more — roughly 3–4× a car loan and 6× a mortgage. Each month your issuer charges balance × APR ÷ 12 before your payment touches principal. At 24% APR on $5,000, that's $100/month of pure interest: a $125 payment would retire the debt at a crawl, and the sneaky part is that minimum payments are designed to hover just above that line.
The minimum-payment trap, quantified
Minimums are typically that month’s interest plus about 1% of the balance (with a small floor). Because the payment shrinks with the balance, the payoff stretches for decades: $5,000 at 24% APR on minimums takes over 20 years and costs more in interest than the original debt. The comparison rows in your result show exactly how much a fixed payment saves versus that path.
Fastest ways out of card debt
- Fix your payment — never let it shrink with the balance. That alone breaks the trap.
- Avalanche method — pay minimums on all cards, throw everything extra at the highest APR.
- 0% balance transfer — 12–21 month promos exist; mind the 3–5% transfer fee and pay it off before the promo ends.
- Negotiate the APR — issuers routinely knock a few points off for customers who ask.
Frequently asked questions
How long to pay off my credit card?
$5,000 at 24% APR with $200/month ≈ 35 months and ~$2,000 interest. Your exact numbers appear instantly above.
Why do minimum payments take decades?
They're set barely above the monthly interest charge and shrink as the balance falls — the design maximizes interest collected.
What payment clears my card in 12 months?
Switch to "target number of months" mode; for $5,000 at 24% it's about $473/month.
Pay off cards or invest first?
Paying a 24% APR is a guaranteed 24% return — beat that before investing (keep any employer 401(k) match, though).