Common questions answered directly.
Credit cards charge daily periodic interest. Your APR divided by 365 gives the daily rate. Each day, this rate is applied to your average daily balance. This is why balances grow so quickly when not paid — interest accrues daily, not monthly.
Even $25-50 extra per month dramatically shortens payoff time. On a $5,000 balance at 22% APR, paying the typical minimum (interest plus 1% of the balance) takes about 19 years and costs about $8,100 in interest. A fixed $150/month takes about 4.3 years ($2,800 interest); a fixed $200/month takes about 2.8 years ($1,750 interest). The marginal value of extra payments is highest early in payoff.
Minimum payments are structured so that most of each early payment goes to interest, with very little reducing the principal. A $5,000 balance at 22% APR paying the typical "interest plus 1%" minimum takes about 19 years and costs roughly $8,100 in interest.
A 0% APR balance transfer can be excellent if: you have good enough credit to qualify, you can realistically pay off the balance before the promotional period ends, and the transfer fee (typically 3-5%) is less than the interest you'd otherwise pay. The calculator can help you see how much interest you'd save.
Yes — credit cards charge interest on your average daily balance. Paying early in the billing cycle reduces that average, slightly reducing the interest charged that month. It's a small effect but real.
Use the credit card payoff calculator — free, no email required.