How much of my minimum payment is interest?

Put in three numbers from your statement. You will see how much of this month's minimum is interest, how much actually reduces what you owe, and — the part statements hide — how long paying only the minimum would really take.

Why the number surprises people

Two things are going on. First, interest is charged on the balance, so a large balance at a normal card rate generates a large monthly interest figure before any payment is applied. Second, credit card minimums are usually a percentage of the balance — so as the balance falls, the payment falls with it, and the finish line keeps moving away.

That is why "minimum payments only" projections that assume a fixed payment are wrong, usually by years.

What to do with the answer

• If most of your payment is interest, the rate is the problem. Ask for a reduction — it is a ten-minute call and roughly one in three works.
• Pay a fixed amount rather than the minimum, even if it is only a little more. A fixed payment ends; a shrinking one does not.
• Attack the highest rate first unless you have a triple-digit APR account, which comes first regardless of size.

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