How credit card interest adds up
Card issuers charge interest every month on the balance you carry. A 24% APR works out to about 2% a month, so a $5,000 balance adds roughly $100 of interest before your payment even touches the principal. That is why small payments can feel like they barely move the balance.
Why a fixed payment beats the minimum
Minimum payments usually shrink as your balance shrinks, which stretches payoff out for years. Picking a fixed amount and paying it every month, even after the minimum drops, means more of each payment goes to principal over time. The table under the chart shows what an extra $50, $100 or $200 a month could change for your numbers.
Ways to lower the cost
- Pay more than the minimum, and pay it every month.
- Ask your issuer for a lower APR. A good payment history helps.
- Compare a balance transfer offer, including its fee and what the rate becomes after the promo period.
- Stop new charges on the card while you pay it down.