How UK credit card interest and payoff time are calculated

The calculator works in this order: take the balance you want to clear → convert the APR into a monthly rate (APR ÷ 12) → add that month’s interest → subtract the payment you typed → repeat until the balance is gone. The last payment is allowed to be smaller than the others so you do not overpay. If the payment is at or below the first month’s interest, the balance never falls and the calculator says so.

That is deliberately simpler than a UK statement. Lenders often use an average daily balance and may compound daily; they also add fees, promotional 0% windows and different APRs for purchases, cash and balance transfers. Monthly APR ÷ 12 is a common planning approximation, and it is the same engine as the tool. It is not a promise of what your issuer will charge.

UK cards advertise a representative APR. That figure has to be a rate a majority of accepted customers can expect to get, not a guarantee of your rate. Your purchase APR can be higher. Cash-advance APR is often higher still, and cash usually starts attracting interest immediately, with a separate fee. This guide uses one purchase APR on one frozen balance.

Worked month one, matching the helper: £2,500 at 22% APR. Monthly rate = 22 ÷ 100 ÷ 12 = 1.833…%. Interest in month one is £2,500 × 0.22 ÷ 12 = £45.83. Pay £100 and the principal falls by £54.17, leaving about £2,445.83. Next month’s interest is charged on that new, slightly smaller figure. Early payments are still mostly interest; later payments are mostly principal. That is the same shape as a repayment mortgage, just at card rates and on a much shorter clock.

A payment of £45 on that same £2,500 never clears it — it does not cover the £45.83 interest. £46 does, but it would take hundreds of months. That is the trap of a payment that only just beats interest.

Keep the £2,500 · 22% balance and only change the payment. £100 a month is 34 months and £874.94 interest. £150 a month is 21 months and £510.80 interest — thirteen fewer months and about £364 less interest. £200 a month is 15 months and £365.80 interest. The extra £50 or £100 a month is not “lost”: most of it is principal you were going to pay anyway, brought forward.

You can also reverse the problem. The calculator’s target-months box asks what fixed payment would clear the same £2,500 at 22% on a deadline. Twelve months needs about £233.99 a month (interest £307.83). Twenty-four months needs about £129.70 (interest £612.69). Thirty-six months needs about £95.48 (interest £937.14). That 36-month figure is only £4.52 below the £100 default, which is why stretching from 34 months to 36 months barely changes the payment but adds more interest.

FCA handbook CONC 6.7.5 says a credit-card or store-card minimum on agreements made on or after 1 April 2011 must be at least the interest, fees and charges applied that period, plus 1% of the amount outstanding. That stops the balance growing when you only pay the minimum — it does not stop the balance lingering for years. MoneyHelper’s rule of thumb is that a typical advertised minimum is around 2.5% of what you owe, or £5 to £25, whichever is higher.

MoneyHelper’s published illustration: £2,000 at 22% APR, paying only a typical 2.5% minimum, takes about 14 years to clear. That is their example, not this calculator. Our tool holds the payment fixed, which is the useful “what if I actually paid £X every month?” question. A real minimum usually shrinks as the balance shrinks, so the last years are a trickle. Even a fixed £50 a month on £2,500 at 22% still takes 137 months and £4,339.03 of interest — because £50 is only a few pounds above the £45.83 first-month interest charge.

Paying only the minimum also keeps you close to the FCA’s persistent-debt test. CONC 6.7.27: if over the previous 18 months you have paid less in principal than in interest, fees and charges (and the balance was not below £200 at any point in that window), the lender must write to you. Later letters, often around 27 and 36 months, have to offer a way to repay over a reasonable period — commonly a lower-rate loan, or reduced or waived interest — and may, as a last resort, suspend the card. That process is not modelled here; it is a conversation with the lender and, if you need it, a free debt adviser.

A personal loan is usually a fixed amount, a fixed APR and a fixed term. The payment is chosen so the balance hits zero on the last instalment — the same family of formula as the target-months box on the card calculator, which is why our loan repayment calculator exists as a separate page. Cards revolve: skip a month of extra payments, or spend again, and the clock resets. Use the loan tool for a quoted personal loan or simple HP-style car finance; use this guide’s calculator for a revolving card balance.

A UK student loan is not a card either. Plan 2 in 2026/27 takes 9% of income above £29,385, through PAYE or Self Assessment, and does not care what you “can afford” as a fixed pounds-per-month target. Our student-loan guide covers plan types. Do not type a student-loan balance into the card calculator.

If you are choosing between a 0% balance transfer and a consolidation loan, the comparison that matters is fee + reversion rate + whether you will actually clear inside the window, versus the loan’s total repayable. This site will not tell you which product to take. It will show the card-payoff path and the loan-repayment path as two separate estimates.

Cash advances, foreign-transaction fees, late fees and over-limit fees. Cash usually has its own APR and a fee, and interest often runs from the day of the withdrawal. New purchases during a payoff plan. The model assumes you freeze the card.

Daily compounding, statement-cycle quirks, and allocation of payments across purchase / cash / promotional pots. UK issuers generally apply payments to the highest-rate balance first, but promotional 0% pots and the order of purchases can still change the result.

Balance-transfer and purchase-fee maths (often a percentage of the transferred amount). Section 75 of the Consumer Credit Act (joint liability on many card purchases between £100 and £30,000) is a protection, not a payoff formula. This site is not authorised by the Financial Conduct Authority and does not arrange credit.