Credit Card Payoff: how it works
Checked 15 Oct 2026. Uses the same approach as Moneysmart's credit card calculator, so you can cross-check a result there.
Interest is charged each month at the yearly rate ÷ 12 on the balance, then your repayment comes off. Like Moneysmart's credit card calculator, it assumes no new purchases, cash advances or fees.
Minimum repayments are usually a percentage of the closing balance or a set dollar amount, whichever is higher. By default this calculator uses 2% or $25; check your statement and change them to match. Because the minimum shrinks as the balance falls, paying only the minimum can take decades and cost several times the original balance in interest.
If your repayment doesn't cover the month's interest, the balance never goes down. The calculator warns you when that happens.
General information only, not financial, tax or credit advice. Check your situation with the ATO, your state revenue office or a licensed adviser.
Credit Card Payoff FAQs
How long will it take to pay off my credit card with minimum payments?
Often decades. A $5,000 balance at 20% p.a., paying a minimum of 2% or $25, takes about 40 years and costs around $18,500 in interest. Paying a fixed $200 a month clears it in 2 years 9 months with about $1,500 in interest.
How is the minimum repayment on a credit card calculated?
Usually as a percentage of your closing balance (often 2% to 3%) or a minimum dollar amount, whichever is higher. If you owe less than that amount, you pay the whole balance. Your statement shows your card's exact terms.
How much should I pay to clear my card in 2 years?
About $254 a month clears a $5,000 balance at 20% p.a. in 2 years, with about $1,107 in interest. For your own card, choose to work out the repayment to clear it by a set time and enter 24 months. Your statement also shows how much to pay each month to clear the balance in 3 years.
Is a balance transfer worth it?
It can be, if you clear the balance before the low-rate period ends and avoid new spending. Watch for transfer fees and the revert rate. Enter the revert rate here to see what happens to anything left over.
What if I can't afford the minimum repayment?
Contact your card provider about hardship options as soon as you can: lenders must consider you for help. Moneysmart explains how financial hardship arrangements work. You can also call the free National Debt Helpline on 1800 007 007.