Credit Card Repayment Calculator

Credit card interest compounds monthly on the outstanding balance after each statement period. A typical UK APR of 24.9% translates to a monthly periodic rate of approximately 1.867% (calculated as (1 + 0.249)^(1/12) - 1). Each month, interest is charged on whatever balance remains after your payment is applied, creating a compounding effect that significantly increases total costs when only minimum payments are made.

Minimum payments in the UK are usually calculated as the greater of a fixed floor amount (typically £5 or £25) or a percentage of the outstanding balance (usually 1% to 3% plus that month's interest). Because the percentage-based minimum shrinks as your balance decreases, repayment slows dramatically over time. A £3,000 balance at 24.9% APR with 2% minimum payments would take over 25 years to clear, costing more than £4,000 in interest alone.

The calculator models three repayment strategies side by side: minimum payments only, fixed monthly payment, and a target payoff date approach. Fixed payments above the minimum accelerate principal reduction because the interest portion shrinks each month while total payment stays constant. Even adding £50 above the minimum can cut repayment time by 10-15 years and save thousands in interest charges.

How credit card interest works. APR (Annual Percentage Rate) charged daily on unsorted balance. Typical UK 2026 APRs: 18.9-29.9% (purchases); 24.9-39.9% (cash advances); 0-29.9% (balance transfer offers). Interest = daily rate × balance × days. Daily rate = APR ÷ 365. £3,000 at 24.9% APR: daily rate 0.068%, daily interest £2.05 = £62/month. Even paying minimum keeps the principal mostly unchanged — minimum payment typically 1-3% of balance, barely covering interest.

Minimum payment trap. Pay only minimum (typically 1% balance + interest): £3,000 at 19% APR with £80 minimum = takes 14+ years to clear, paying £2,800+ interest. UK FCA persistent debt rules (since 2018): card issuers must contact customers paying minimum for 18+ months — offer affordability help, payment plan, and (if extreme) freeze interest. ALWAYS pay more than minimum if you can — even £20 extra/month dramatically shortens repayment.

0% balance transfer cards — the strategy. Move existing card debt to a 0% balance transfer offer (12-32 months 0% interest 2026). Transfer fee: typically 2.9-3.9% of balance. £3,000 transfer with 3% fee = £90, then 24 months 0% interest. Pay £125/month = clear in 24 months, save £700+ interest vs minimum payment on standard card. Catch: must qualify (good credit score), then need to actually pay it off before promotional period ends — otherwise revert to 20-30% standard APR.

Order of repayment if multiple debts. Avalanche method (mathematically optimal): pay minimums on all, then attack HIGHEST APR debt with all spare cash. Snowball method (psychologically motivating): pay minimums, then attack SMALLEST balance first — quick wins build momentum. Generally avalanche saves £100-£500 on typical debt loads. Hybrid: use avalanche unless you've struggled to maintain motivation — then snowball. Standing orders/Direct Debits help — automation removes 'will I, won't I' temptation.

UK credit card best practices. Pay in full each month: 0% interest cost, build credit score, get cashback/points. Direct debit for minimum + manual top-up to full = safety net. Section 75 protection: purchases £100-£30,000 protected against retailer failure or non-delivery. Foreign use: most UK cards charge 2.99% non-sterling + 3% cash advance fee — exceptions: Chase, Halifax Clarity, Barclaycard Rewards. Cash advances: charge fee + interest from day 1 (no grace period) — avoid at all costs. Credit utilisation: keep under 30% of limit for best credit score.