Credit Card Payoff

It depends entirely on your monthly payment. The standard 2% minimum on a $5,000 balance at 22% APR takes over 30 years to pay off and costs more than $13,000 in interest. Doubling that to a fixed $200/month clears the same balance in about 33 months for roughly $1,500 interest. Always pay more than the minimum.

As of late 2024, the Federal Reserve reported the average APR on accounts assessed interest at about 22.8% - the highest level since the data series began in 1994. Cards for fair credit often charge 25%–30% APR. Carrying a balance at these rates is one of the most expensive forms of debt available.

A balance transfer to a 0% promo (typically 12–21 months) can save thousands if you pay off the balance before the promo ends. Watch for the 3%–5% transfer fee (a $5,000 transfer with a 3% fee costs $150 upfront). After the promo, any remaining balance accrues at the regular APR, often 20%+, so build a plan to pay it off in full during the promo window.

Paying down balances usually helps by lowering credit utilization (a major scoring factor - keep below 30%, ideally under 10%). Closing a paid-off card can slightly hurt your score by reducing total available credit and shortening average account age. If there's no annual fee, consider keeping the account open and using it occasionally for small charges paid in full.