Why credit cards cost so much to carry
Card rates are usually far higher than mortgage or car loan rates, and interest is charged on your balance every month. When most of your payment goes to interest, the balance barely moves.
The minimum payment trap
Minimum payments are small and often shrink as your balance falls, which stretches payoff out for years. Choosing a fixed amount you keep paying, even as the minimum drops, gets you out much faster. This calculator assumes a fixed payment and no new purchases.
Which card to pay first
If you have several cards, paying the minimum on all of them and putting extra on the highest rate (the avalanche method) saves the most interest. Paying off the smallest balance first (the snowball method) costs a bit more but gives quicker wins that keep some people motivated. Either works if you stick with it.
Balance transfers
A low-rate transfer offer can help, but check the transfer fee and when the promotional rate ends. If you can’t pay off the balance before then, the rate may jump back up.