Credit card debt can feel overwhelming, especially when minimum payments barely make a dent. This guide shows you exactly how long it will take to pay off your balance, how much interest you'll pay, and strategies to become debt-free faster.
The Minimum Payment Trap
Credit card companies set minimum payments low (typically 1-3% of balance or £5-25) because it maximises their interest income. Here's the shocking reality:
Minimum Payments Only
£3,000 balance at 22% APR
Try Our Free Credit Card Payoff Calculator
Calculate how long it will take to pay off your credit card and how much interest you will pay. Get instant results with our Credit Card Payoff Calculator. You may also find our Debt Payoff Calculator, Loan Calculator and Interest Rate Calculator useful.
Fixed £100/month
£3,000 balance at 22% APR
How Credit Card Interest Works
Credit card interest is calculated daily on your outstanding balance:
Daily Rate = (APR ÷ 365)
Monthly Interest:
Interest = Balance × Daily Rate × Days in Month
Example: £2,000 Balance at 24.9% APR
Daily rate: 24.9% ÷ 365 = 0.068% per day
30-day interest: £2,000 × 0.00068 × 30 = £40.80
If your minimum payment is £40, you're barely covering the interest!
Credit Card Payoff Calculator
See how different payments affect your payoff time:
£5,000 Balance at 21% APR
| Monthly Payment | Time to Pay Off | Total Interest | Total Paid |
|---|---|---|---|
| Minimum (~£100) | 10+ years | £4,200+ | £9,200+ |
| £150 | 4 years 2 months | £2,440 | £7,440 |
| £200 | 2 years 10 months | £1,640 | £6,640 |
| £300 | 1 year 9 months | £980 | £5,980 |
| £500 | 11 months | £510 | £5,510 |
Strategies to Pay Off Debt Faster
1. Pay More Than the Minimum
Even an extra £20-50 per month makes a huge difference. Set up a fixed payment amount rather than paying the declining minimum.
2. Use a Balance Transfer Card
Transfer your balance to a 0% interest card:
- Typical offers: 0% for 18-29 months
- Transfer fee: Usually 1-3% of balance
- Best for: Those who can clear the balance within the 0% period
Balance Transfer Example
Balance: £4,000 at 22% APR
Transfer to: 0% for 24 months (3% fee = £120)
Monthly payment needed: £4,120 ÷ 24 = £172
Interest saved: ~£1,500 compared to staying at 22%
3. The Avalanche Method
If you have multiple credit cards, pay minimum on all except the highest interest card. Put all extra money towards that one. Once it's cleared, move to the next highest rate.
4. The Snowball Method
Alternatively, pay off the smallest balance first for psychological wins, then roll that payment into the next smallest debt.
5. Make Two Payments Per Month
Paying fortnightly instead of monthly reduces your average daily balance, cutting interest costs even if you pay the same total amount.
What Happens If You Only Pay the Minimum?
Minimum payments typically start at 2-3% of your balance (minimum £5-25). As your balance falls, so does the minimum payment—meaning you're paying less and less each month.
The Shrinking Minimum Problem
Month 1: £2,000 balance → £60 minimum (3%)
Month 12: £1,800 balance → £54 minimum
Month 36: £1,400 balance → £42 minimum
Each month you pay less, extending the debt indefinitely.
Credit Card Debt Calculator Formula
n = -log(1 - (r × B / P)) / log(1 + r)
Where: n = months, r = monthly interest rate, B = balance, P = monthly payment
Typical Credit Card APRs (UK)
| Card Type | Typical APR |
|---|---|
| Reward/Cashback cards | 22-28% |
| Standard credit cards | 19-25% |
| Credit builder cards | 29-35% |
| Store cards | 25-40% |
| 0% purchase cards (after period) | 20-25% |
Warning Signs of Problem Debt
- Only ever paying the minimum
- Using one card to pay off another
- Not knowing your total debt
- Missing payments
- Maxing out credit limits
- Using credit for everyday essentials
Getting Help with Debt
If you're struggling, free help is available:
- StepChange: Free debt advice charity (0800 138 1111)
- National Debtline: Free advice for UK residents (0808 808 4000)
- Citizens Advice: Local support and guidance
- Money Helper: Government-backed free advice
Action Plan to Clear Credit Card Debt
- List all cards: Balance, APR, minimum payment for each
- Total your debt: Know exactly what you owe
- Set a fixed payment: Higher than any minimum
- Consider balance transfer: If you qualify for 0%
- Stop using the cards: Cut them up if needed
- Track progress: Watch your debt shrink
- Celebrate milestones: Every £1,000 cleared is a win
The True Cost of Credit Card Debt in the UK
Credit card debt is one of the most expensive forms of borrowing available to UK consumers, with typical interest rates ranging from 19% to 29% APR (Annual Percentage Rate) for standard cards, and even higher for store cards which can charge up to 40% APR. Understanding how credit card interest is calculated and the true cost of minimum payments is essential for anyone carrying a balance.
Credit card interest in the UK is typically calculated on a daily basis using the Average Daily Balance method. Your annual rate is divided by 365 to get a daily rate, which is then applied to your outstanding balance each day. This means that even a single day's delay in making a payment results in additional interest charges. If you have a £3,000 balance at 22% APR, you are accumulating approximately £1.81 in interest every single day.
The minimum payment trap is one of the most costly mistakes UK consumers make. Minimum payments are typically set at 1% of the balance plus interest, or a fixed minimum (usually £5-£25), whichever is greater. Paying only the minimum on a £3,000 balance at 22% APR would take over 27 years to clear and cost more than £4,000 in interest alone, meaning you would pay back more than double the original amount borrowed.
Debt Repayment Strategies That Work
Two popular strategies for tackling multiple credit card debts are the debt avalanche and debt snowball methods. The avalanche method prioritises paying off the card with the highest interest rate first while making minimum payments on others, which saves the most money mathematically. The snowball method prioritises the smallest balance first, providing psychological wins that keep motivation high. Research suggests the snowball method has higher success rates despite being slightly more expensive, because the emotional momentum of eliminating debts quickly helps people stick with their plan.
A 0% balance transfer card can be a powerful tool if used correctly. The best deals offer 0% interest for up to 29 months, though a transfer fee of 1.5-3.5% of the balance typically applies. To benefit, divide your transferred balance by the number of 0% months and pay at least that amount each month. For example, transferring £3,000 to a 24-month 0% card with a 2.9% fee (£87) means paying £128.63 per month to clear it before the promotional period ends. Set up a direct debit for this amount immediately.
Taking Control of Credit Card Debt
If you are struggling with credit card debt, free debt advice is available from organisations such as StepChange, Citizens Advice, and National Debtline. These charities can negotiate with creditors on your behalf and help set up formal debt management plans. Never pay for debt advice in the UK, as free services provide the same quality of assistance.
Building a small emergency fund of £500-£1,000, even while paying off debt, can prevent the cycle of re-borrowing when unexpected expenses arise. This might seem counterintuitive when you are paying high interest rates, but the behavioural benefit of not reaching for a credit card when the boiler breaks down is significant. Once your credit cards are paid off, redirect those payments into savings to build a fuller emergency fund of three to six months' expenses.
How does credit card interest actually work in the UK?
UK credit card interest is calculated daily on your outstanding balance. Your APR is divided by 365 to get a daily rate, which is applied to whatever you owe each day. If you pay your full statement balance by the due date each month, you will not be charged any interest at all (this is the interest-free period, typically 45-56 days). Interest only applies when you carry a balance from one month to the next. Cash withdrawals usually incur interest immediately with no interest-free period.
Should I use savings to pay off credit card debt?
In most cases, yes. If your credit card charges 22% APR and your savings earn 4-5% interest, you are losing 17-18% per year on every pound kept in savings while carrying credit card debt. The exception is your emergency fund, which provides a financial safety net. Keep a small emergency buffer and direct everything else toward clearing the highest-interest debt first.
What is a good strategy for someone with multiple credit cards?
List all your credit card debts with their balances and interest rates. Make minimum payments on all cards to avoid penalties and credit score damage. Then direct any extra money to either the highest-interest card (avalanche method, saves the most money) or the smallest balance (snowball method, provides quick wins). Consider consolidating with a 0% balance transfer if you qualify. Most importantly, stop using the cards for new spending while paying them down.