Credit Card Interest Calculator

How Credit Card Interest Works

Credit card interest is charged monthly on your outstanding balance. Unlike mortgages or loans where you have a fixed payment schedule, credit cards give you flexibility in how much you repay each month — but this flexibility comes at a cost.

The APR (Annual Percentage Rate) on UK credit cards typically ranges from about 18% to 30%, though some store cards can be even higher. This rate is divided by 12 to calculate the monthly interest charge.

The Minimum Payment Trap

UK credit card providers are required to set a minimum monthly payment, typically the greater of 2% of the outstanding balance or £25. While paying the minimum keeps your account in good standing, it barely touches the capital — most of the payment goes to interest.

This creates a dangerous cycle: as the balance slowly decreases, the minimum payment also decreases, meaning you pay less each month and progress slows even further. A £3,000 balance at a typical APR can take over 20 years to clear with minimum payments alone.

Strategies to Pay Off Credit Card Debt

• Pay more than the minimum — even £20-50 extra per month makes a dramatic difference
• Balance transfer — move to a 0% balance transfer card and pay it off during the interest-free period
• Snowball method — pay off the smallest balance first for psychological momentum
• Avalanche method — pay off the highest APR card first to minimise total interest

Frequently Asked Questions

How long will it take to pay off my credit card?

It depends on your balance, APR, and monthly payment. Use the calculator above with your specific numbers. As a rough guide: £3,000 at 22% APR with £100 monthly payments takes about 3 years and 3 months.

What happens if I only pay the minimum?

You'll stay in debt for much longer and pay far more in interest. The calculator above shows the exact comparison between your chosen payment and the minimum payment scenario.