How to calculate credit card costs
Use the credit card interest calculator above to help work out the costs of owning a credit card and how much interest you will pay.
Our credit card interest calculator will show you how long it will take you to pay off your balance based on what you repay each month, and how much it will cost you overall including the interest payable.
Just enter your current balance, APR and monthly repayments. You can then adjust your monthly repayments to see how paying more or less each month will change your debt.
How does credit card interest work?
Credit card interest is typically charged on a monthly basis as a percentage of your balance. Your balance is spending made on the credit card that you haven’t paid off.
Typically, most purchases you make on your card will be free of interest charges for up to 56 days after the purchase, but if you haven’t paid them off in that period the interest charges are backdated. Some cards also offer specific ‘0% purchase’ periods that let you pay no interest for longer.
You can avoid paying interest on your balance by paying it off in full and before the end of the month. If you can’t pay it off in full then your balance will accumulate interest charges.
If you fail to make a payment then it’s likely you will be charged interest and a penalty fee, and it will show up on your credit report, negatively affecting your credit score.
The more you can pay back each month, the less interest you will end up paying overall. The longer you take to pay off your balance, the more you will end up paying.
Interest is different from the Annual Percentage Rate (APR), which factors in a number of costs, not just the rate on purchases, balance transfers, but also annual fees, if applicable.
The results from the credit card calculator are representative and not a guarantee of the exact interest you will end up paying.
Should I just make the minimum repayments?
No. In the world of credit cards, one of the worst things you can do is just make your minimum repayments. Minimum repayments are just that – the bare minimum – and are a sure-fire way of paying too much interest. You could end up paying more in interest than you did for the item you purchased on the credit card if you only pay the minimum.
Paying off your debt using minimum payments ensures that your debt will last as long as possible, and the credit company will charge you the maximum amount of interest.
How can I pay less interest?
There are two main ways to pay less interest: pay more each month or transfer your debt to a balance transfer card.
Increasing your monthly payments will always be beneficial to your credit card debt as it will speed up how quickly you can pay off your card and therefore reduce the amount you pay in interest overall.
Crucially, however, it should be based on what you can afford. There’s no point paying off more of your credit card balance if it leaves you overdrawn at the end of the month, or missing bill payments.
That’s when balance transfer cards can be helpful. If your debt is significant and you're struggling to increase your minimum payments you can shift the debt for a one-off fee. That then gives you a grace period, within which you can pay off your debt without worrying about interest payments. This grace period could be 12 months or more, giving you breathing room to get on top of your debt.
Could a balance transfer card help?
If you’re struggling to pay off your balance and are facing significant interest payments as a result, you could apply for a balance transfer credit card. Balance transfer cards allow you to transfer your current credit card’s debt over to a new credit card provider. You will usually pay a one-off transfer fee, which can range from around 1% to 3% of the amount you transfer.
Once you’ve transferred the balance, you will be given a longer period of time to pay it off with 0% interest.
Balance transfer periods range from six months to more than two years. The longer the balance transfer period, the more likely you are to require a higher credit score.
Why don’t I just keep transferring my debt using balance transfer cards?
Whilst balance transfer cards can be a great fix they aren’t a long-term solution for a number of reasons.
Firstly, you can’t transfer a balance from one provider to a balance transfer card issued by the same provider, so your options are limited.
Secondly, every time you transfer a balance you will most likely be charged a percentage of your balance as a transfer fee.
But most crucially, if you fail to clear the debt within the 0% period your balance transfer card will revert to a standard interest rate. If you can’t then transfer your balance to another provider you will end up paying a lot for your 0% debt.
