How long does it take to pay off a $5,000 credit card?

At a typical 20% interest rate, paying only the minimum (2% of the balance or $25, whichever is greater) it would take over 30 years to pay off a $5,000 credit card balance and you'd pay over $8,000 in interest alone. By paying a fixed $200 per month instead, you'd clear the debt in about 2 years and 8 months and pay around $1,300 in interest — saving over $6,700.

How is credit card interest calculated in Australia?

Australian credit card interest is calculated daily on your outstanding balance using your card's annual interest rate divided by 365. Interest is then charged to your account monthly. If you pay your full statement balance by the due date, most cards offer an interest-free period (typically 44–55 days). However, if you carry a balance from month to month, interest applies to all purchases from the date of transaction. Cash advances typically accrue interest immediately with no interest-free period.

What is the minimum payment on a credit card?

Most Australian credit cards set the minimum payment at 2% of the outstanding balance or $25, whichever is greater. Some cards use 2.5% or 3%. While paying only the minimum keeps your account in good standing, it can take decades to clear your balance and cost thousands in interest. Financial counsellors recommend paying as much above the minimum as you can afford each month.

Should I use a balance transfer to pay off my credit card?

A balance transfer card with a 0% introductory rate (typically 12–24 months) can be a smart strategy to pay off credit card debt faster, as all your payments go towards the principal instead of interest during the promotional period. However, watch out for balance transfer fees (usually 1–3% of the amount transferred), and make sure you can pay off the balance before the promotional period ends, as revert rates are often 20% or higher. Avoid making new purchases on the balance transfer card.

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Last verified: 1 July 2025

How long will it take to pay off my credit card?

Australian credit cards typically charge 18-22% p.a. and set minimum repayments at 2% of the balance (or $25, whichever is higher) — paying the minimum only can stretch a small debt over 30+ years. Fixing a monthly payment is the single biggest lever. On a $5,000 balance at 20%: minimum only → 30+ years and ~$8,000 in interest; $200/month fixed → 2 years 8 months, ~$1,300 interest; $300/month → 1 year 7 months, ~$730. Source: ASIC MoneySmart; RBA Retail Deposit and Lending rates.

Worked example. $10,000 balance at 20% p.a. Minimum 2% only → ~45+ years and ~$26,000 total interest. $300/month fixed → 3 years 10 months, ~$3,800 interest. $500/month → 2 years, ~$2,100 interest. $1,000/month → 11 months, ~$980 interest. A 0% balance transfer for 12-24 months (watch the 1-3% transfer fee and revert rate) redirects every dollar to principal during the promo.

General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.

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