Credit Card Payoff Calculator

Understanding Credit Card Debt & The Minimum Payment Trap

Credit card debt is one of the most expensive forms of borrowing in North America. With average APRs of 22-25% in the US and 20-22% in Canada, credit card interest can quickly compound and turn a modest balance into a years-long financial burden. Our Credit Card Payoff Calculator shows you exactly how much faster — and cheaper — it is to pay more than the minimum.

The Minimum Payment Trap Explained

Credit card companies typically set minimum payments at just 1-3% of your balance (with a floor of $25-$35). This sounds convenient, but it's designed to maximize interest revenue. On a $5,000 balance at 22.99% APR, paying only the minimum could take over 20 years to pay off and cost more than $8,000 in interest — more than the original balance itself!

Strategies to Pay Off Credit Card Debt Faster

The Fixed Payment Method: Choose a fixed amount above the minimum and pay it every month. Even $50-$100 extra per month can save you thousands. The Debt Avalanche: Focus extra payments on the card with the highest interest rate first. This minimizes total interest paid. The Debt Snowball: Pay off the smallest balance first for psychological wins that keep you motivated. Balance Transfer: Transfer high-interest balances to a 0% APR promotional card. In the US, look for cards offering 15-21 months at 0%. In Canada, balance transfer promotions typically offer 0-1.99% for 6-12 months.

Credit Card Interest: US vs. Canada

US: Average credit card APR is 22-25% (2026). Interest compounds daily on most cards. You only pay interest if you carry a balance past the grace period (usually 21-25 days). Canada: Standard cards charge 19.99-22.99%. Low-rate cards exist at 8.99-12.99% but often have annual fees. Both countries offer a grace period of at least 21 days on new purchases if you pay your statement balance in full.

Key Tip: Always pay at least 2-3x the minimum payment. Even small increases in your monthly payment can cut years off your payoff timeline and save thousands in interest.