$500 of Credit Card Debt at 20% APR

Monthly compounding · figures recalculated on every build · no new purchases assumed

A $500 balance at 20% APR costs $8 in interest for the first month it sits there. What happens after that depends entirely on the size of the payment: the same balance can take 1 year to clear or can grow without ever clearing, and the tables below show where that line falls.

First-month interest$81.667% monthly rate

At the minimum payment$113total interest, 2 years 1 month

Clear it in 24 months$30rounded up to $5

Fixed monthly payment → payoff time

Each row holds the payment steady from the first month to the last. Interest is charged first, then the payment is applied, so the final instalment is smaller than the rest.

Monthly payment	Time to clear	Total interest	Interest / balance
$25 minimum (2%)	2 years 1 month	$113	22.7%
$30	1 year 8 months	$91	18.1%
$35	1 year 5 months	$76	15.2%
$50	1 year	$52	10.3%

Payment needed to finish in a set number of months

Solved with the standard amortisation formula, the same one behind the calculator on the homepage: payment = balance × monthly rate ÷ (1 − (1 + monthly rate)^−months).

Target	Payment	Total paid	Interest paid	Paid / borrowed
12 months	$50	$552	$52	1.10×
24 months	$30	$591	$91	1.18×
36 months	$25	$613	$113	1.23×
48 months	$25	$613	$113	1.23×
60 months	$25	$613	$113	1.23×
72 months	$25	$613	$113	1.23×

monthly rate = 20% / 12 = 1.6667% · payment = $500 × 0.01666667 / (1 − (1 + 0.01666667)^−n)

Shaving four points off the APR

At the minimum payment, this balance costs $113 in interest at 20%. At 16% the same payment clears it in 2 years and costs $85, a difference of $28. That is the number a balance-transfer offer has to beat after its fee is added back.

The monthly rate of 1.667% turns $500 into a $8 charge before any principal moves. With the minimum at $25 (2% of the balance, floored at $25), the payoff runs 2 years 1 month and costs $113, while the twelve-month target of $50 a month finishes in 1 year for $52. Between the $25 and $50 plans sits $62 of interest, which is the real price of the slower schedule.

Other tables in this range

Same balance, different rates

$500 at 12% $500 at 15% $500 at 18% $500 at 22% $500 at 24% $500 at 26% $500 at 29%

Same rate, different balances

$1,000 at 20% $1,500 at 20% $2,000 at 20% $2,500 at 20% $3,000 at 20% $4,000 at 20%

Frequently asked questions

What does 20% APR work out to each month?
Dividing the annual rate by twelve gives a monthly periodic rate of 1.667%. On the full $500 balance that is $8 of interest in the first month. Every payment below that figure leaves the balance larger than it started, which is why the minimum-payment row is the one that goes wrong.

Why does the minimum payment sometimes never retire this balance?
The 2% minimum is a share of the balance as it stands, so as the balance shrinks the payment shrinks with it. At 20% APR the monthly rate is 1.667%; once the balance is small enough that 2% of it drops below the interest charge, the loop stops making progress. Raising the payment by even $25 a month keeps the debt on a downward path.

Is the interest compounded or simple?
Compounded monthly, which is what card issuers actually do. Interest is charged on the balance including previously accrued interest, and each payment is applied after that charge. The table shows the total interest summed across the whole payoff period, not a first-month estimate.

Want the numbers for several cards at once? The CardDebtCalc snowball vs avalanche calculator runs the same loop across a stack of balances, and the full payoff table library lists every balance and rate on this site.