Credit card debt is one of the most expensive consumer debts in Australia — typically 18%–22% p.a., compounding monthly. This calculator shows you exactly how long it will take to pay off your balance and how much you'll pay in interest, with options to compare different repayment strategies.
Why minimum payments don't work
Australian credit card minimum payments are typically 2%–3% of the balance, with a $20–$30 floor. The math is brutal at high rates:
| Balance | Rate | Minimum (2%) | Time to clear | Total interest |
|---|---|---|---|---|
| $3,000 | 18% | ~$60 | 25+ years | $7,500+ |
| $5,000 | 18% | ~$100 | 30+ years | $13,500+ |
| $10,000 | 18% | ~$200 | 30+ years | $27,000+ |
The minimum is structured so most of the payment covers interest, with very little going to principal. Each month, the unpaid interest compounds onto the balance. Without a meaningful step-up in payment, the balance barely moves.
How much extra to pay
A useful benchmark: pay enough each month to reduce the balance by at least 2% (i.e. double the minimum). On $5,000:
- $100/month minimum → 30+ years
- $200/month → ~3 years
- $400/month → ~14 months
- $500/month → ~11 months
Doubling the minimum cuts the payoff from 30 years to 3 years on a typical balance. The relationship is non-linear because compounding works against you at minimum and for you at higher payments.
The three exit ramps
1. Balance transfer to 0% intro card Most major Australian banks offer 0% balance transfer cards for 12–24 months. Move the debt over, pay aggressively, clear before the introductory period ends. Watch the balance transfer fee (typically 1%–3%) and the post-intro standard rate. Used correctly, this is the cheapest way out.
2. Personal loan consolidation A personal loan at 8%–12% replacing 18%–22% credit card rates saves substantially. Fixed payoff date, lower rate, structured exit. Critical: close the credit cards, don't just pay them off. Otherwise you end up with the loan AND new credit card debt.
3. Avalanche method (no refinance) If you can't get a balance transfer or consolidation loan, attack the highest-rate card first while making minimums on others. Once the highest is cleared, roll the freed-up payment to the next card. Mathematically optimal for paying down without restructuring.
Snowball vs avalanche
Avalanche (highest rate first) saves more money mathematically.
Snowball (smallest balance first) clears one card faster, providing motivation.
For people who've struggled with credit card debt previously, snowball usually wins because the behavioural reliability matters more than the small extra interest cost. If you have the discipline to stick with avalanche, it saves more — typically a few hundred to low thousands of dollars on a multi-card debt.
When to use offset for credit card paydown
If you have a home loan with offset, draining offset to clear credit card debt is almost always the right move:
- Credit card rate: 18%–22%
- Effective offset rate: ~6%
Each $1,000 of credit card debt cleared by offset saves $120–$160 of interest per year vs ~$60 of mortgage interest "lost" by the lower offset balance. Net win of $60–$100 per $1,000.
The behavioural risk: people who drain offset for credit cards often re-use the cards, ending up with both. If that's a real risk for you, do the offset drain in steps and close the cards as you go.
Avoiding the next round
The fastest payoff plan is undermined if new debt accumulates. Three habits that keep credit card debt cleared:
- Auto-pay the full statement balance every month — never carry a balance
- Use the card for budget categories you can afford — not as a credit facility
- Treat credit card spending as cash spending — track in your budget like any other expense
Used as a 30-day no-interest float on planned spending, credit cards are fine. Used as a short-term loan, they're the most expensive money you'll ever borrow.
Frequently asked questions
How long does it take to pay off a credit card on minimum payments only?
Decades, in many cases. Australian credit card minimums are typically 2–3% of the balance. On a $5,000 balance at 18% interest paying 2% minimum, you'll need over 30 years to clear the debt and pay roughly $13,500 in total interest. The minimum is set to maximise the bank's interest revenue, not to help you pay off.
What's the fastest way to pay off credit card debt?
Three options ranked by impact: (1) balance transfer to a 0% interest card and pay aggressively during the introductory period (typically 12–24 months), (2) personal loan at a much lower rate (8–12%) and pay it off via the loan structure, (3) the avalanche method — pay highest-rate cards first while making minimums on others. Most Australians do best with option 1 if eligible.
Should I use the snowball or avalanche method?
Avalanche (highest rate first) saves the most money. Snowball (smallest balance first) provides faster psychological wins. Mathematically avalanche is better; behaviourally snowball wins for people who need motivation. The right answer depends on whether you'll stick with the plan. If you've struggled with credit card debt before, the behavioural reliability of snowball often beats the small extra interest savings of avalanche.
Are balance transfer offers worth it?
Yes if used correctly: pay off the full balance during the 0% introductory period (typically 12–24 months), then close the card or pay it off before the standard rate kicks in. Balance transfers fail when people transfer the debt and continue spending, ending up with two cards instead of one. Treat the balance transfer as a final clearance, not a refinance.
What about debt consolidation loans?
A personal loan at 8–12% replacing 18%–22% credit card rates can save thousands. Two requirements: (1) you must close the credit cards, not just pay them off, and (2) the loan must have a fixed payoff date. Consolidation loans backfire when the cards stay open and get re-used — you end up with the personal loan PLUS new credit card debt.
Should I keep credit card debt while I have a mortgage offset?
No. Credit card debt at 18%–22% costs more than mortgage interest saved by offset (~6%). Drain the offset to clear the credit cards, then rebuild the offset balance from monthly cashflow. Even if it feels uncomfortable to reduce the offset, the maths is clear — every dollar against credit card debt earns you 18% tax-free vs 6% tax-free in offset.
What does 'minimum repayment trap' actually mean?
Australian credit cards must show you, on each statement, how long it will take to pay off the balance at minimum payments — typically 30+ years on most balances. The 'trap' is that the minimum is calibrated to compound interest at the card rate; small minimums plus high rates means most of each payment goes to interest, not principal. Even paying $50/month above the minimum can knock 20+ years off the payoff timeline.
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Last updated: 2 May 2026