Here's What Happens if You Pay an Extra $50 a Month on Your Credit Card Balance

Paying off credit cards can seem just about as difficult as climbing Mount Everest. After all, the interest rate on most cards is really high, averaging 21.47% as of November 2023. With such a high rate combined with minimum payments that are very low relative to what you owe, you'll make progress at about the pace of a snail climbing that mountain if you're paying only the minimums.

But what happens if you pay just an extra $50 a month toward your cards?

Sending an extra $50 doesn't require a ton of planning, and you may be able to find that much extra cash by making a few simple changes like skipping one meal out at a restaurant per week or canceling two streaming services you aren't getting much value from.

You'd be surprised at just how much of a difference it can make, though.

This is what an extra $50 a month can do for you

The impact of paying an extra $50 can be much bigger than you'd expect.

The specifics do depend on your credit card interest rate and how much you owe, though. The table below shows the effects of your additional $50 monthly payment with different credit card balance amounts -- assuming all cards are at the average interest rate of 21.47% and assuming your minimum monthly payment is the greater of 2% of your balance or $10 (so you would pay 2% of your balance until that would leave you with a payment under $10, as $10 is the absolute minimum payment on your card).

As you can see, you'll cut decades off the time that it takes to repay your credit card debt even if you are only sending in an extra $50 per month out of your checking account.

And the savings you can earn are huge, with interest costs coming in tens of thousands of dollars lower in most cases.

Why does an extra $50 have such a big effect?

An extra $50 is not a huge sum of money, but it makes a big difference in how soon your credit card debt is paid off. That's because the entire amount is extra money that goes to reduce your balance -- which isn't the case when you don't pay extra.

If you pay a small minimum payment, almost the entirety of that payment is going to be eaten up by the interest charges on your card -- especially if your card is like most cards and you're charged a high rate. But if you put in extra money with every payment, that entire amount directly goes toward reducing what you owe.

As your balance falls, interest costs drop, too, and a little more of your payment ends up going to principal that month. And that's why just $50 a month makes a difference -- it helps your balance drop a whole lot faster.

So if you have cards you're paying down, try to find an extra $50 (or $20, or $100, or any amount) to put toward them. Every little bit helps and has more impact than you'd ever think it could.