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An Extra $25 a Month Can Save You $2,000 and 18 years on Credit Card Debt

It happens. People need to use their credit card to pay for an emergency expense or bridge a financial gap. Or maybe they thought some extra money was coming so they borrowed a little more than usual, only to find out that money wasn’t there. However, it happens, there is credit card debt and people are looking for the best way to get it quickly paid down. Well here is one tip that can make a huge dent in the balance.

Table showing credit card payoff by payment amount.

Balance $5,000

Interest rate is 18%

Standard PaymentFixed PaymentFixed Payment
Monthly payment

2.5% of the balance

($125 first month only)

$150 a month$125 a month

Interest paid over

the life of the loan


Total amount repaid


Time to pay off

22 years3 years, 11 months5 years, 2 months

You can see in the chart that this person owes $5,000 on one credit card. The interest rate is 18%. We are assuming, for this example, that they are never going to use the card again - the goal is to get out of debt.

If they only make minimum payments on the card, it will take them over 22 years to pay that account off. They will pay more than double what they currently owe. It is a scary thought.

Making minimum payments keeps people in debt longer. In the Standard Payment column, 2.5% of the $5,000 balance would be $125 the first month. After that the payments would begin to decrease as the balance decreases. But the decrease is very small. Because at the same time you are paying down the debt, the account is also charged interest. You can see how that works (and adds up) by clicking on this link.

There is great news, though! By increasing the monthly payment just $25, to $150 every month (no matter what the minimum payment due shows), they will cut over 20 years off the time and reduce the amount paid back by over $5,000. Just think of what could be done with the extra $5,000!

They could also leave their payments at $125 every month. They would still save significantly over someone making only the minimum payments. At $125 every month, it would take 62 months to pay off the credit card and the interest paid would be $2,693.11.

So, it does not take a huge payment change to save a lot of money when paying off debt. Small steps are just as important.

American Financial Solutions’ certified counselors are here to help with numerous financial goals. If you or someone you know could use help getting out of debt, developing some new budgeting and savings tools, or simply need some financial advice, please share our number and website.

Published Jan 20, 2020.