How we calculate
The exact method behind the Payoff Calculator, in plain words, with a worked example you can check by hand.
1. Monthly interest
Each month we add interest to what you owe, then take off your payment:
monthly interest = balance × APR ÷ 12
Example: $3,000 × 22.36% ÷ 12 = $55.90 in the first month.
This is an approximation, and we say so on every result. Card issuers usually charge interest with a daily rate on your average daily balance, so your statement's numbers can differ slightly from ours. We assume no new purchases, no fees, no rate changes, and every payment made on time, starting next month.
2. The minimum payment: an example rule
Every card sets its minimum payment in its own card agreement, so there is no single "right" rule. The calculator uses an example rule, and you can change both numbers:
minimum = the larger of: interest + 1% of the balance, or $25
Why this rule: the Consumer Financial Protection Bureau's 2023 Consumer Credit Card Market Report (page 40) says most issuers set the minimum payment at 1% of the balance, with interest, fees and past-due amounts added on top, and that every issuer sets a flat dollar floor: from $20 to $41 in 2023, most often $35. We use $25, which sits inside that range. A higher floor makes small balances pay off a little faster, so for a small balance our estimate can show a slightly longer payoff and more interest than a $35 floor would. At a $3,000 balance the floor makes no difference, because 1% plus interest is already above it. We leave out fees and past-due amounts, as the assumptions above say.
Example: in the first month, $55.90 interest + 1% of $3,000 ($30.00) = $85.90. That is more than $25, so the minimum is $85.90: $55.90 goes to interest and $30.00 to the balance.
Your statement shows your own card's numbers: card issuers have to print a "Minimum Payment Warning" that says how long your balance would take to pay off at the minimum (Regulation Z, §1026.7(b)(12)).
3. The last payment
The last payment is usually smaller than the others, and we always count it. It is whatever is left plus that month's interest. Example: $215 at 0% APR, paying $50 a month, takes 5 months, not 4: four payments of $50 and a last payment of $15.00.
If less than half a cent would be left after a payment, we add it to that payment, so the plan never ends with a payment of $0.00.
4. Warnings
- The balance never goes down. If a payment is not more than that month's interest, the balance can't shrink. We stop and say so, with the monthly interest the payment has to beat. Example: $5,000 at 24% APR has $100 of interest in the first month, so paying $100 a month never pays it off.
- More than 30 years. If a plan takes more than 360 months, we say so plainly.
- We stop at 50 years. The calculator stops after 600 months; anything longer shows as "not within 50 years".
- Numbers that look off (an APR above 40%, a balance above $100,000) get a "double-check this number" note. Empty fields, letters, negative numbers or a $0 balance get a note and no result until they are fixed.
We keep full precision while we calculate and round to the cent only when we show a number.
5. Worked example: a $3,000 TV at 22.36% APR
This is the example from Normdale's videos. Example only: the rate is the Federal Reserve's average (see sources), not a rate for your card.
Paying only the minimum (example rule)
| Month | Interest | Payment | Balance after |
|---|---|---|---|
| 1 | $55.90 | $85.90 | $2,970.00 |
| 2 | $55.34 | $85.04 | $2,940.30 |
| 12 | $50.05 | $76.91 | $2,659.15 |
| 24 | $44.36 | $68.17 | $2,357.03 |
| 180 (last) | $0.36 | $19.84 | $0.00 |
Result: 180 months (15 years). Total paid $7,514.54, of which $4,514.54 is interest. The last payment is $19.84.
Paying a fixed $150 a month
| Month | Interest | Payment | Balance after |
|---|---|---|---|
| 1 | $55.90 | $150.00 | $2,905.90 |
| 2 | $54.15 | $150.00 | $2,810.05 |
| 12 | $34.71 | $150.00 | $1,747.58 |
| 24 | $6.12 | $150.00 | $184.55 |
| 26 (last) | $0.71 | $38.70 | $0.00 |
Result: 26 months (2 years 2 months). Total paid $3,788.70, of which $788.70 is interest. The last payment is $38.70.
The difference: the same $3,000 costs $3,725.84 more at the minimum ($7,514.54 − $3,788.70), and takes 154 months longer.
Open this example in the Payoff Calculator
6. How we test it
Before the calculator goes live, and after any change, it must pass a set of worked examples with known answers, including every number on this page. A second, separate program (written in another language) recomputes the same cases, and both must agree. The same math is used in Normdale's products.
Sources
- Average credit card rate, 22.36%: Federal Reserve, Consumer Credit G.19, interest rate on credit card plans, accounts assessed interest, August 2026 (preliminary). "Accounts assessed interest" means accounts that paid interest. federalreserve.gov/releases/g19/current Checked October 28, 2026; the August figure is preliminary and the next release is expected about Nov 6.
- Minimum Payment Warning on statements: Consumer Financial Protection Bureau, Regulation Z, §1026.7(b)(12). consumerfinance.gov/rules-policy/regulations/1026/7
- Example minimum-payment rule: Consumer Financial Protection Bureau, Consumer Credit Card Market Report, 2023, page 40 (1% of the balance plus interest, fees and past-due amounts, with a dollar floor of $20 to $41, most commonly $35). Checked October 28, 2026.
- Every other number on this page is calculated with the method above and can be checked by hand.
Example only, not financial advice. Found a mistake? Email hello@normdale.com. See our editorial policy and disclaimer.