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Frequently asked questions about pay off dates and credit card interest

A minimum payment is the smallest amount you can pay on your credit card bill to avoid late fees and remain in good standing. As long as you make this payment on or before the payment due date, your account is considered current.

 

Typically, the minimum payment is a percentage of your total current balance, plus any interest you owe. So if you owe $2,000, your minimum payment might be $40. Learn More: What is a Credit Card Minimum Payment?

There are plenty of tools, like our Credit Card Payoff Calculator, that will do the math for you. So all you need to enter are a few data points to quickly see an estimate of how much interest you'll pay.


If you want to crunch the numbers yourself, first take your APR (Annual Percentage Rate) and divide it by 365 (the days in the year) to get your daily interest rate. Your credit card issuer will then multiply this number by your daily balance for each day in the billing period. That’s how much interest you’ll be charged for one day. This interest gets compounded, which means it’s added to what you owe. Each day, you’ll have a new daily balance and the credit card issuer will calculate the interest on this amount. So until you pay back what you owe in full, you’ll keep getting charged interest. Learn More: Understanding How Credit Card Debt Works

Even if you can’t pay off your balance in full, it can be helpful to pay more than the minimum payment to work towards being debt-free. To do this, we recommend coming up with a budget plan (and sticking with it) so you can better understand how you’re spending your money, and how you can cut costs. Even an extra $5 or $10 a month can help you pay less in interest, and may make more of an impact than you might think. Learn More: How to Pay Off Credit Card Debt

While carrying a balance doesn’t affect your credit score, your credit utilization does. This is how much of your available credit you’re using. A high utilization could be seen as a high risk for potential lenders, while a low utilization shows them you’re able to pay off your balances in a timely manner. Keep in mind, credit utilization typically makes up almost a third of how your credit score is calculated. Learn More: How Do Utilization Rates Affect My Credit Score?