Debt Payoff Example
Pay Off $5,000 Debt — How Long and How Much Interest?
Calculate how long it takes to pay off $5,000 in debt and the total interest paid.
Scenario
$5,000 debt at 18% APR (typical credit card rate).
Inputs
Debt Amount$5,000
APR18%
Results
Min. payment only ($100)94 months / $4,311 interest
$150/month44 months / $1,555 interest
$250/month24 months / $713 interest
$500/month11 months / $317 interest
Explanation
At 18% APR, paying only the minimum on $5,000 costs $4,311 in interest over 7+ years. Doubling to $150/month cuts the interest by 64% and the term by more than half. Credit card debt at 18–24% is almost always the highest-priority debt to eliminate.
Key Takeaways
- Balance transfer to 0% APR (12–21 months) can eliminate interest entirely.
- Avalanche method: focus all extra payments on the highest-rate debt.