Credit card debt can be a significant financial burden if not managed carefully. The monthly payment on a credit card is typically calculated based on a percentage of your outstanding balance, plus any interest accrued since your last statement. This calculator helps you estimate that minimum payment. However, it's crucial to understand the underlying mechanics.
How is the Minimum Monthly Payment Calculated?
Most credit card companies calculate the minimum payment using a formula that includes a percentage of your balance and the interest charged. A common formula is:
Minimum Payment = (Minimum Payment Percentage * Outstanding Balance) + Interest Charged for the Period
Outstanding Balance: This is the total amount you currently owe on your credit card.
Minimum Payment Percentage: This is the percentage of your balance that the credit card issuer requires you to pay as part of the minimum. This is often around 1% to 3%, but can vary.
Interest Charged for the Period: This is the interest that has accrued on your balance since your last payment. It's calculated using your Annual Interest Rate (APR). The monthly interest is approximately: (Annual Interest Rate / 12) * Outstanding Balance.
The Importance of Paying More Than the Minimum
While this calculator shows the minimum required payment, consistently paying only the minimum can lead to significant long-term costs due to interest. Credit card interest compounds, meaning you pay interest on the interest you've already accrued. This can make it take many years, and cost you much more, to pay off your debt.
For example, if you have a balance of $2,500 with an 18.99% APR and a minimum payment of 2% of the balance plus interest:
If you only pay this minimum amount, a large portion of your payment goes towards interest, and the principal balance decreases very slowly. Choosing to pay a fixed, higher amount (like $100 or $150) will help you pay down the debt faster and save money on interest over time. This calculator provides a way to estimate that initial minimum, but always strive to pay more!
function calculateMonthlyPayment() {
var balance = parseFloat(document.getElementById("balance").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var minPaymentPercentage = parseFloat(document.getElementById("minimumPaymentPercentage").value);
var fixedPayment = parseFloat(document.getElementById("fixedPayment").value); // Optional fixed payment
var resultValueElement = document.getElementById("result-value");
if (isNaN(balance) || balance < 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(minPaymentPercentage) || minPaymentPercentage 0 && calculatedMinimumPayment calculatedMinimumPayment) {
finalPayment = fixedPayment;
}
// Credit card companies often have a floor for minimum payments (e.g., $25)
var minimumFloor = 25.00;
if (finalPayment 0) {
finalPayment = minimumFloor;
}
resultValueElement.textContent = "$" + finalPayment.toFixed(2);
}