PakFinanceGuidesHow APR works on cards, why minimum payments keep you in debt and practical steps to clear a balance.
APR in plain words
APR is the yearly cost of borrowing on a card. Interest is usually charged monthly on your balance, at roughly the APR divided by 12. If you pay the full statement balance on time, many cards charge no interest on purchases.
The minimum payment trap
Minimum payments are often a small percentage of the balance. That keeps the card affordable but stretches repayment over many years. A $5,000 balance at 22% paying $200 a month takes about 34 months and costs around $1,750 in interest.
What a bit extra does
Pay $300 a month instead of $200 and the same balance clears in roughly 20 months, with about $1,020 in interest. Extra payments have a big effect because interest is charged on a smaller balance each month.
Two common methods
The avalanche method targets the highest-APR debt first and saves the most money. The snowball method clears the smallest balance first for quick wins and motivation. Either works if you stick to it.
Other options
A 0% balance transfer can pause interest, but check the fee and the end date. A personal loan at a lower rate can also simplify repayment. Avoid adding new spending to the old card.
Check your own numbers
Try the credit card payoff calculator with your real APR and payment.
General information and education only. Not financial, tax, investment or legal advice. Rules and rates differ by country, so check official sources.