The True Cost of Debt Calculator

Loan Balance

= $5,000

The outstanding principal you owe.

Truth in Lending Act, 15 U.S.C. §1638 (required disclosure)

Annual Percentage Rate (APR)

= 24%

The annual cost of borrowing including most fees. Federal law requires APR (not just nominal interest rate) be disclosed for direct comparability.

Regulation Z (12 CFR §1026.22) — APR calculation rules

Monthly Interest Rate (periodic rate)

APR ÷ 12

24% ÷ 12

= 2.0000%

Card issuers and lenders apply this periodic rate to your balance each month. This is the workhorse number behind every interest charge.

Regulation Z 12 CFR §1026.14(c) — periodic rate disclosure

Monthly Interest Charge

Balance × Monthly Rate

$5,000 × 0.020000

= $100

How much of your minimum payment goes to interest alone each month — before any principal is touched.

CARD Act §171 minimum-payment disclosure (15 U.S.C. §1637(b)(11))

Daily Interest Charge

Balance × (APR ÷ 365)

$5,000 × 0.000658

= $3.29/day

Most credit cards use the average daily balance method — this is what you pay every single day, including weekends, just to hold the balance.

CFPB: Average Daily Balance method (12 CFR §1026.14(b))

Months to Payoff (Minimum Only)

n = −ln(1 − r × Balance ÷ Payment) ÷ ln(1 + r)

r = 0.020000, P = $5,000, M = $100

= Never

The standard amortization formula. Solves for the number of months to fully amortize the balance at the given monthly rate and payment.

Standard amortization formula; CFPB minimum payment warning model

Total Interest — Minimum Payment

Payment × Months − Balance

$100 × 11988 − $5,000

= Never

You pay Infinity% of the original balance in interest alone. The CARD Act of 2009 requires issuers to print this 36-month and minimum-payoff math on every statement for exactly this reason.

Credit CARD Act of 2009 §201 — minimum payment disclosure

Interest Saved — Doubling Payment

Interest(min) − Interest(double)

Never − $2,200

= Never

Doubling your monthly payment cuts both the time to payoff AND the total interest dramatically — because you attack principal before compound interest can grow it.

Federal Reserve: Consumer Credit (G.19) — avg US household credit-card debt $7.7k (2024)