The average American household with credit card debt owes about $16,000, but many don't realize the true cost of this type of debt. If you make the minimum payments, which are often mostly interest, it can take decades to pay off the total. Here's how to tell how long it will take you, and how much it will cost.

Why credit card debt is so dangerous

In a nutshell, credit card debt is dangerous for two main reasons: low minimum payments and high interest rates. As an example, the credit card in my wallet right now has an interest rate of 17.49%, and the minimum monthly payment is calculated as the interest charged on the statement plus 1% of the balance, or $35, whichever is higher.

A woman holds a credit card in one hand and a smartphone in the other.

Image source: Getty Images.

In other words, if I have $10,000 of outstanding debt, my monthly interest charge will be about $146, and I only have to pay $100 of the principal, so $246 in total. By only making minimum payments, it could take more than 21 years to pay off the debt, and I'll end up paying $13,219 in interest.

Keep in mind that there are some credit cards with much higher interest rates. In fact, many cards issued to consumers with shaky credit histories and cards issued by retailers have interest rates in the 30% ballpark. And most credit cards have variable interest rates. If rates rise, my card's interest rate will rise as well.

How long will it take to pay off your credit card debt?

As we saw in the previous example, the length of time and money required to pay off your credit card debt depends on how much you pay each month, your starting balance, and your interest rate. You can find how your minimum monthly payment is calculated in your cardholder agreement, which is usually available online.

Once you know your minimum payment, interest rate, and current balance, here's a calculator that can tell you how long it will take to pay off your credit card.


* Calculator is for estimation purposes only, and is not financial planning or advice. As with any tool, it is only as accurate as the assumptions it makes and the data it has, and should not be relied on as a substitute for a financial advisor or a tax professional.

Two ways you can speed up the process

1. Pay more than the minimum: This may seem obvious. After all, the more you pay on your cards each month, the faster your balance will go down. However, many people don't realize just how great of an impact this can have. Consider my earlier example of $10,000 in credit card debt. If I were to pay an additional $100 per month on this card, it would only initially increase my monthly payment by 41%.

It may surprise you to learn that doing this would cut the payoff time from 21.3 years to just 5.7 years, and would cut the total interest expense to $4,508. In other words, a relatively small increase in the monthly payment would save more than $8,700 in interest and pay off the card more than 15 years sooner.

2. Refinance: Another option that can help accelerate your payoff efforts is to transfer the balance to another credit card with a 0% introductory APR. This way, 100% of your payments will go toward paying down the principle. As of this writing, you can find a 0% APR period of up to 21 months, or a 0% APR for 15 months with no balance transfer fees (note: A 3% fee is the industry standard).

One important point to remember: Transferring the balance is only an effective idea if you pay down the balance aggressively after doing so, in order to take advantage of the no-interest time period. At the very least, you should keep paying your old minimum payment, as the new one is likely to be lower (since you don't have to pay interest).

The bottom line is that credit card debt is dangerous if you use it the wrong way. Ideally, you don't carry much of a balance on your credit cards at all, but if you do, paying only the minimum each month is a bad financial move. This calculator can shed some light on just how much this approach can cost, but can also show you the dramatic impact a small increase in your monthly payment can have.