Finance

Personal Credit Card Monthly Interest Calculator (5 Years)

Estimate monthly interest on a card balance. This personal version uses a 5-year planning term as its starting point.

The "Monthly interest" figure is the amount charged in interest for one month on the balance you entered, before any part of the balance itself is repaid, so paying only that amount leaves the balance unchanged.

Formula

Monthly interest equals balance times annual rate divided by 100 divided by 12.

How it works

Paying only interest leaves the balance unchanged. Paying more than interest reduces the balance.

Worked example

Balance $5,000.00, annual rate 18%, term 5 years. First, the monthly interest is $5,000.00 times 18 divided by 100 divided by 12, which is $900.00 divided by 12, which is $75.00. Over 60 months, paying only interest costs $75.00 times 60, which is $4,500.00. That is 90.0% of the balance. If only interest is paid, the balance at the end is still $5,000.00, because no part of the $75.00 payment repays the balance itself.

Who this term suits for a person: A 5-year term suits a person who is about to carry a card balance for a planned, short period and wants the true cost in front of them first, for example someone who paid for essential home repairs on a card and plans to clear the balance in stages. The warning is already clear: paying only the $75.00 interest each month does not reduce the $5,000 at all, so a real plan must pay more than $75.00 every month.

FAQs

Why is card interest high?
Card rates are usually higher than loan rates, so balances grow quickly if only minimum payments are made.

Is this personal calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Why does $75.00 a month still leave me owing $5,000 after 5 years?
Because $75.00 is interest only. The page formula charges interest on the balance, it does not repay any of the balance itself. Paying only interest for 60 months costs $4,500.00 in interest and leaves the full $5,000.00 still owed at the end of the 5 years.

How much interest will I pay in 5 years if I only pay the interest?
On a $5,000.00 balance at 18%, the monthly interest is $75.00. Over 60 months that is $75.00 times 60, which is $4,500.00. That is 90.0% of the balance, paid on top of a balance that is still there.

Can I reduce the $75.00 by paying part of the balance?
Yes. Interest is charged on the balance that remains, so a smaller balance means smaller interest. If the balance falls to $4,000.00, the next monthly interest is $4,000.00 times 18 divided by 100 divided by 12, which is $60.00. Every dollar of principal repaid cuts future interest.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.