Score: 4.7/5 (58 votes)

If your balance (including interest and fees) were $10,000, for example, you'd owe a minimum of **$200**. This method is most often used by credit unions and subprime banks, according to a 2015 study by the Consumer Financial Protection Bureau.

Let's say your balance is $1,000 and your annual percentage rate (APR) is 24%. Your minimum payment would be **1%—$10—plus your monthly finance charge—$20**—for a total minimum payment of $30.

What is the minimum payment on a $5,000 credit card balance? The minimum payment on a $5,000 credit card balance is **at least $50**, plus any fees, interest, and past-due amounts, if applicable.

The simplest way to make this calculation is to **divide $10,000 by 12**. This would mean you need to pay $833 per month to have contributed your goal amount to your debt pay-off plan. This number, though, doesn't factor in the interest on your debt.

In order to pay off $10,000 in credit card debt within **36 months**, you need to pay $362 per month, assuming an APR of 18%. While you would incur $3,039 in interest charges during that time, you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.

Find the interest rate that you pay on your card—12% APR, for example. Convert that annual rate to a monthly rate by dividing by 12—because there are 12 months in a year—so, in this example, you'd pay 1% per month. **Multiply the monthly rate by your outstanding balance**. As an example, use 1% times a balance of $7,000.

On average, Americans carry **$6,194** in credit card debt, according to the 2019 Experian Consumer Credit Review. And Alaskans have the highest credit card balance, on average $8,026.

**Anything over 30% credit utilization is considered high and will hurt your credit score** — and that goes for your debt per card as well as your total debt overall. Lower credit utilization is more favorable.

**Debt snowball method**

To get started, list your account balances in order from lowest to highest. Set up your budget to pay the minimum on all your credit card accounts except the one with the smallest balance. For that balance, put as much extra money as you can toward paying it off each month.

A minimum payment of 3% a month on $15,000 worth of debt means 227 months (almost 19 years) of payments, starting at **$450 a month**. By the time you've paid off the $15,000, you'll also have paid almost as much in interest ($12,978 if you're paying the average interest rate of 14.96%) as you did in principal.

For example, a card with a $5,000 balance and 18% interest rate will take you **20 months** to pay off if you pay $500 per month. On the other hand, another card with the same $5,000 balance and $300 monthly payment but with an interest rate of 10% will take you 18 months to pay off.

**A 24.99% APR is reasonable for personal loans and credit cards, however, particularly for people with below-average credit**. You still shouldn't settle for a rate this high if you can help it, though. A 24.99% APR is reasonable but not ideal for credit cards. The average APR on a credit card is 18.89%.

With minimum payments only, you'll pay off the debt in about **6 years and 11 months**. If you pay an extra $50 each month with the minimum payment, the time can be shortened by about three years. The amount paid in interest will also decrease significantly from $3,294 to $1,656.

**About 52% of Americans owe $2,500 or less on their credit cards**. If you're looking at $5,000 or higher, you should really get motivated to knock out that debt quickly.

The average debt for individual consumers dropped from $6,194 in 2019 to **$5,315** in 2020. In fact, the average balance declined in every state.

According to a 2020 Experian study, the average American carries **$92,727** in consumer debt. Consumer debt includes a variety of personal credit accounts, such as credit cards, auto loans, mortgages, personal loans, and student loans.

A good annual income for a credit card is **more than $39,000 per annum for a single individual or $63,000 per year for a household**. Anything lower than that is below the median yearly earnings for Americans.

Credit Card Debt Trends

In Q4 2021, the average credit cardholder in the U.S. had **$5,934** in credit card debt in Q4 2021 — about 0.6% less than Q4 2020's $5,968 average. During this same period, Americans opened 26 million more credit card accounts.

Highlights: Credit scores are three-digit numbers that show an important piece of your financial history. Credit scores help lenders decide whether to grant you credit. The average credit score in the United States is **698**, based on VantageScore^{®} data from February 2021.

You can figure out how much interest you will pay on your credit card by **dividing the card's APR by 365**. Then, multiply the result by your average daily balance and, subsequently, the number of days in the billing period. The interest charges you owe will also be listed on the credit card's monthly statement.

If you have a credit card with a 24% APR, that's **the rate you're charged over 12 months, which comes out to 2% per month**. Since months vary in length, credit cards break down APR even further into a daily periodic rate (DPR). It's the APR divided by 365, which would be 0.065% per day for a card with 24% APR.

The credit card minimum amount due is the amount that a cardholder is required to pay on or before the payment due date. Typically, the minimum amount due is calculated as **5% of the total outstanding amount**.