When you get your credit card statement each month, you'll see both the closing balance and a "minimum monthly repayment" amount. Paying more than the minimum amount helps you save on interest and clear the balance faster – but "how much" is different for everyone.
Credit card repayment calculator
You can use this calculator to work out how long it will take you to pay off your card, how much you'd need to pay each month to meet your goal and how much you could save by switching cards or making bigger repayments.
*Whilst every effort has been made to ensure the accuracy of this calculator, the results should only be used as an indication. They are neither a recommendation nor an eligibility test for any product and should not be construed as financial advice, investment advice or any other sort of advice.
How is credit card interest calculated?
There are two basic forms of interest, simple and compound, and credit cards accrue compound interest. There are also two parts to a credit card balance, the principal balance and the interest charges. Simple interest is charged as a fixed percentage on only the principal balance, so as you pay it down, regardless of how much you pay, you will pay less interest in the subsequent period. This assumes you are not making any new purchases to add to the principal balance.
Compound interest is charged as a fixed percentage on both the principal balance and the existing interest charges, so as you pay it down, if you're paying too little, you can end up paying more interest in the subsequent period. This is why it is critical to pay off as much of your statement balance as possible, to avoid paying interest on interest.
What is the minimum I need to pay on my credit card?
While the closing balance is everything you owe, the minimum repayment shows what you have to pay back by the due date to keep your account in good standing.
Your card issuer sets this minimum monthly repayment on your credit card. This amount varies between credit card issuers but is usually calculated as 2–3% of your closing balance, with a minimum dollar charge of around $20 to $30. And it can sometimes be up to 10% of your closing balance.
To give you an idea of these costs, here are the minimum monthly repayment requirements of some popular credit card issuers:
- American Express credit cards. The higher of $30 or 2.5% of your closing balance
- ANZ credit cards. The higher of $25 or 2% of the closing balance
- CommBank credit cards. The higher of $25 or 2% of the closing balance
- NAB credit cards. The higher of $25 or 2% of the closing balance
- St.George credit cards. The higher of $10 or 2% of the closing balance
- Westpac credit cards. The higher of $10 or 2% of the closing balance
Every time you get a credit card statement, the minimum repayment amount will be shown in dollars. This means you won't have to calculate the percentage owed if you carry a balance. Using the calculator above, if you input the minimum repayment amount into the 'Monthly payment' field, it will tell you how long it will take to pay off your balance. You can then change your payment amount to work towards your goal payoff time, or enter your payoff goal and it will tell you how much to pay each month (assuming you are not making new purchases).
What will happen if I just make the minimum credit card repayment?
If you just make the minimum monthly payment, you'll only pay off a small percentage of your credit card debt (leaving the majority of your balance to grow with interest). This means your credit card debt could cost you hundreds or thousands of dollars in interest, plus it could take years to pay back. If you continually carry a balance that takes up a large portion of your overall card limit, this can also negatively impact your credit score.
Instead of only paying the minimum repayment, you should always aim to either pay off your balance in full or try to clear as much of the debt you can each month to minimise your interest costs.
Maximising your repayment dollars
Let's say you have a $5,000 debt on a credit card with an interest rate of 15% p.a. and you want to work out the most efficient way to pay down the debt.
The minimum monthly payment on your latest credit card statement is $100 (the greater of $20 or 2% of the closing balance) but you calculate how much you can save if you start putting money aside and paying $250 off your card each month.
|Minimum monthly repayments||Higher monthly repayments|
|Credit card debt||$5,000||$5,000|
|Interest rate||15% p.a.||15% p.a.|
|Monthly repayment amount||the greater of $20 or 2% of the closing balance||$250|
|Total time to pay off debt||24 years 5 months||2 years|
|Total interest paid||$7,245.78||$789.73|
|Total amount saved||-||$6,456.05|
As you can see from the table, you can save a massive $6,456.05 by making higher repayments and pay your debt off in two years. However, if you were to continue to only make the minimum required payment, it would take more than 24 years to get out of debt. This clearly demonstrates why you should always try to pay more than the minimum monthly payment if possible.
What can I do if I'm struggling to repay my debt?
If you're struggling to pay off your credit card debt because of interest costs, you can consider transferring it to a card with 0% on balance transfers. This means you can repay your debt without paying any interest for a promotional period (such as 0% p.a for 24 months). At the end of the introductory offer, the standard cash advance rate or interest rate will apply to your debt.
You'll still need to pay more than the minimum repayment to completely pay off your debt before the revert rate applies. For example, if you had a credit card debt of $2,000 and a card with 0% on balance transfers for 12 months, you'd need to pay $250 per month to clear the debt within a year and before you start accruing interest. You may be paying more upfront, but your overall interest costs will be less and you'll pay off your debt faster if you pay more than the minimum requirement.
Compare savings with our credit card balance transfer calculator
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Frequently asked questions
Want to know more about calculating credit card payments or minimum payments? We have answered some of the most commonly asked questions below. You can also use the form below to get in touch with us if you have any other questions.
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Should I use a credit card payment calculator?
It's up to you, but a credit card payment calculator can help you determine how long it will take you and how much it will cost you to repay your current credit card debt. If you're struggling to repay your debt or need to create a budget plan to pay down your credit card, you could find a credit card payment calculator useful.
What happens if I fail to make even the minimum monthly payment before the due date?
You will usually be charged a late payment fee. Missing the minimum monthly payment will also leave a negative mark on your credit file, which could impact your likelihood of receiving approval for other loans in the future. If you fail to pay the minimum amount, your debt will also continue to grow with interest (making it potentially even more difficult to pay off in the future).
Where can I find out how much my minimum repayment is?
Your minimum repayment amount will be included in your monthly credit card statement. However, you can also see the card reviews on finder or read your card's product disclosure statement (PDS) to confirm what the exact minimum repayment amount is.
Will I still be charged interest if I make the minimum repayment?
Yes, interest charges will still apply to the remainder of the balance you haven't paid off. So if your minimum repayment is 2%, you'll collect interest on the remaining 98% of your balance.
Is there anything I can do to reduce the interest charged on my debt?
Yes, here are a few options you can consider depending on your circumstances:
- If you have existing credit card debt. You may wish to move it to a new balance transfer credit card that offers an introductory low or 0% interest rate.
- If you have upcoming purchases you need to make. You could look at a card with an introductory 0% purchase rate.
- If you often carry a balance. Switching to a card with a low ongoing interest rate could help you save on interest charges when compared to cards with higher interest rates. But it would still be ideal to pay more than the minimum and avoid carrying a balance whenever possible.