Fixed Vs Minimum Payment Credit Card Calculator

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See the shocking difference that fixing your minimum payments will have on the time and money needed to pay off your credit card.

Use this free online calculator to calculate credit card payoff comparisons between making declining minimum monthly payments and fixed monthly payments.

Unlike most credit card payoff calculators, this calculator will also calculate how many hours you will need to allocate to working just to pay the interest charges on the credit card -- for both fixed and minimum payment methods.

Plus, the calculated result also includes an interest cost bar chart for a visual representation of the fixed versus minimum payment savings.

Note that if you would like to see how much your monthly payment would need to be in order to meet a designated payoff goal, please visit the Credit Card Monthly Payment Calculator.

What is the Declining Minimum Payment Method?

4 Simple Steps to Paying the Most for Everything You Buy

If you are determined to pay the highest possible price for everything you buy, here are the 4 steps:

1. Put all of your purchases on credit cards.

2. Make only the minimum payments on your cards.

3. Make all payments after they are due to trigger the late fees.

4. Skip the first payment to jump your APR to the 29.99% maximum asap.

If you "play your cards right" you could easily increase the cost of a $100 item, to well over $500.

In turn, this will afford you the opportunity to work 5-times the hours to buy the same amount of stuff.

Don't laugh, millions of consumers are actually following these 4-steps! Please don't be them!!

The declining minimum payment method is what credit card companies use to calculate your monthly payments -- which is designed so that your payments get smaller as your balance-owed gets lower. The two most common formulas used to employ the method are explained below.

Minimum Percentage Formula

Typically these payments are calculated by multiplying the balance you owe by a small percentage, usually between 2% and 5%. If the percentage causes the payment to fall below the stated minimum dollar amount (usually $10 to $15), the minimum dollar amount is used.

For example, if you have a $2,000 balance on card carrying an 18% APR with a minimum payment percentage of 2%, and a minimum dollar amount of $15, then your minimum payment would be $40 (2000 x .02). You can calculate your own minimum payment here.

The future financial happiness killer is that your interest charge for the month would be $30 (0.18 APR ÷ 12 months x 2000), which means that only $10 of your $40 payment is going to reduce what you owe. Ouch!

1% Formula

More and more credit card companies are adopting this method, which simply calculates 1% of your balance and adds it to the current month's interest charges.

In this case, referring back to the earlier example, your minimum payment would be equal to $30 interest plus $20 (.01 x 2000) for a total payment of $50.

A Perpetual Windfall for Credit Card Companies

Regardless of which minimum payment formula they use, credit card companies make a fortune from luring their spendthrift customers into making only the minimum monthly payments on their revolving charge accounts -- which usually just barely covers the current month's interest charges.

And because so little of your payments go toward paying down what you owe (the principal), these payments can easily last for 10, 20, even 30 years -- and cost you thousands of dollars in wasted interest charges.

And guess what? If you are a responsible borrower and always make your payments on time, the credit card companies reward you by asking you to pay exorbitantly high interest rates to pay for all the irresponsible borrowers who file bankruptcy on their credit card balances.

Now doesn't that make you feel special?

Fix Your Payments and Save a Ton!

One of the easiest ways for you to save a fortune in interest charges is to turn your current minimum monthly payment into a fixed payment.

In other words, whatever your current minimum payment is, just continue to make that payment amount until your balance is paid off. Then force yourself to never carry a balance on your credit card ever again. Instead ...

Become Your Own Credit Card Company

Once you pay off your credit card, begin depositing the freed-up monthly payment amount into a savings account.

That way you can use a debit card to borrow from yourself and only be out 0.5%-2% interest earnings rather than paying 18% - 29.99% interest to the card companies.

With that, let's use the following calculator to calculate credit card payoff comparisons between minimum and fixed monthly payments.

Fixed Payment Vs. Minimum Payment Calculator
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Instructions: Enter the credit card's current balance, annual interest rate, current minimum payment, and minimum dollar payment.

Next, enter your real hourly wage, then click the "Calculate Credit Card Payoff Comparison" button.

Mouse over the blue question marks for a further explanation of each entry field. More in-depth explanations can be found in the glossary of terms located beneath the calculator.

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Help Current balance ($):
Help Annual interest rate (%):
Help Current minimum payment amount:
Help Smallest minimum payment allowed ($):
Help Optional: Real hourly wage ($):
Results Number of
Payments
Interest
Cost
Work Hours
to Pay
Interest
Help Minimum payment:
Help Fixed payment:
Help Fixed payment savings:
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Fixed Vs Minimum Payment Credit Card Calculator Glossary of Terms

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Current balance: The current balance on your credit card. If you've made any purchases with your card since your last statement, be sure to add those charges to the balance as well.

Annual interest rate (APR): The annual interest rate you are being charged on the credit card. Enter as a percentage (for .1799, enter 17.99%).

Current minimum payment amount: The minimum payment amount for the current month as listed on your credit card statement.

Smallest minimum payment allowed: The lowest allowable minimum payment dollar amount. For example, if your credit card company states your payment will be 2% of the balance, or $15, whichever is greater, enter 15 in the field provided.

Real hourly wage: Optional: If you want to compare how many hours you will need to allocate to work just to pay the interest charges on your credit card, enter your real hourly wage in the field provided. Otherwise leave blank. Note: If you click on the link, the Real Hourly Wage Calculator will open in a new window.

Minimum payment result row: This row shows the number of payments and the total interest cost if you make only the declining minimum monthly payments on your credit card. If you included your real hourly wage in your entries the calculator will also show you how many hours you will need to work to pay the interest charges when making only the minimum monthly payments.

Fixed payment result row: This row shows the number of payments and the total interest cost if you fix the payments on your credit card. If you included your real hourly wage in your entries the calculator will also show you how many hours you will need to work to pay the interest charges when making fixed monthly payments.

Fixed payment savings result row: This row shows the month and interest savings you will realize if you make fixed monthly payments instead of declining minimum monthly payments. If you included your real hourly wage in your entries the calculator will also show you how many work hours you will save when making fixed monthly payments.

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