Credit Card Calculator

Payments, Interest and Minimums

Each month, this calculator charges interest on the card balance first and then subtracts your repayment. Only the part of a repayment above that month's interest reduces the balance. The monthly interest is the balance multiplied by the annual rate, divided by 12.

Take a hypothetical $5,000 balance at 18% a year. The first month's interest is $75.00. A $75 repayment leaves the balance at $5,000 every month. A $50 repayment adds $25 in the first month and more each month after that. A $250 repayment clears the card in 2 years, with a final payment of $239.13 and $989.13 interest.

A minimum repayment is the higher of a percentage of the closing balance or a dollar amount, and it is never more than the closing balance. The minimum falls as the balance falls, so the debt clears slowly and most of what you pay goes to interest. On the same $5,000 at 18%, a 2% minimum with a $25 floor starts at $101.50. Paying only the minimum takes 29 years 6 months and costs $11,688.88 interest.

When one card holds balances at different rates, such as a transferred balance and new purchases, Australian card providers apply repayments to the highest-rate balance first. CommBank's explanation of credit card payment order notes exceptions for instalment plans and some older card contracts.

Moneysmart's credit card calculator treats a higher fixed repayment as paid at the start of each month, before interest. That timing produces less interest for the same inputs: about $883 instead of $989.13 in the $250 example. Match the payment timing before comparing the two results.

Balance Transfers and Target Payoff Dates

A balance transfer moves card debt to a card charging a promotional rate for a set number of months. The reverting rate then applies to whatever is still owed. The transfer fee is a percentage of the amount moved, and this calculator adds it to the transferred balance.

With the starting figures, $5,000 moves with a 2% fee, so the new card owes $5,100.00. At 0% for 12 months and $250 a month, $2,100.00 remains when the 21.99% reverting rate starts. The transfer clears in 1 year 10 months with $201.60 interest. Including the $100.00 fee, it costs $831.44 less than keeping the 20% card, which takes 2 years 1 month and $1,133.03 interest.

To clear the debt before the promotion ends, divide the transferred balance by the promotional months when the promotional rate is 0%. Here, $5,100.00 over 12 months is $425.00 a month. The results show this repayment for any promotional rate.

The target period works backwards from a number of months to the level monthly repayment that clears the card. For $5,000 at 18% over 24 months, the exact repayment is $249.6205, which the calculator rounds up to $249.63 so the final payment still clears the balance. For a transfer, the same calculation charges the promotional rate first and the reverting rate for the remaining months.

The comparison assumes every repayment is on time and nothing new is spent on the transfer card. Moneysmart's balance transfer guide warns that a missed repayment can cancel the promotional rate. Repayments can also go to new purchases before the transferred balance.

Card Debt in a Mortgage Assessment

A home loan lender assesses a credit card by its approved limit, not by the balance this calculator pays down. APRA's prudential practice guide APG 223 gives 3% of the total committed limit each month as an example of a prudent assessment. On that basis, a $10,000 limit counts as a $300 monthly commitment even when the card balance is $0.

Lenders set their own assessment rates, so the monthly figure can differ between lenders. Repaying the balance lowers interest costs but leaves the assessed commitment unchanged while the limit stays open. Reducing the limit or closing the card is what lowers the commitment a lender counts.

Before a loan application, use the payoff estimate to show a client what clearing the balance costs and how long it takes. Then set it beside the commitment their card limit adds to the assessment. Seeing both figures together helps the client decide whether to clear the debt, reduce the limit or close the card before applying.