Model how long your credit card debt will take to pay off and how much interest you'll pay. Compare the minimum-payment trap, extra payments, and avalanche vs snowball strategy for multiple cards.
Minimum-payment trapAvalanche vs snowball
01 —INPUTS
AU standard card purchase rates are typically 18–23%. Low-rate cards ~9–14%.
Your planned fixed monthly payment.
Optional — test the impact of adding more each month.
Used for the "minimum trap" comparison. AU cards typically set minimum = max(% of balance, dollar floor).
02 —RESULTS
Your plan
Paid off in3 yr 1 mo
Total interest$3,081.12
Total paid$11,081.12
Minimum-payment trap (if you only paid the minimum)
Time to pay off29 yr 8 mo
Total interest$19,649.25
First month's minimum$200.00
Paying $300.00/mo instead saves $16,568.13 in interest and clears the card 26 yr 7 mo sooner.
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Interest on personal credit cards is not tax-deductible in Australia. Assumes monthly compounding and no new purchases.
The minimum payment on an Australian credit card is designed to stretch your debt out, not to pay it off. On a typical $8,000 balance at 21.99% APR with a 2.5% / $30 minimum, a minimum-only payer would take more than 25 years and pay over $16,000 in interest — more than twice the original balance.
Since July 2012, credit card statements must display a "paying the minimum only" timeline precisely because this trap is so profitable for lenders. The single best thing you can do is fix a monthly payment and never drop below it, even if the statement's minimum goes down as the balance shrinks.
Avalanche vs snowball
→Avalanche: Pay the minimum on every card, then throw every spare dollar at the card with the highest APR. Mathematically optimal; pays the least total interest.
→Snowball: Pay the minimum on every card, then attack the card with the smallest balance first. You clear individual cards sooner, which builds motivation, but pays more interest than avalanche.
The multi-card mode shows both outputs side by side so you can see the dollar cost of choosing snowball. In many real portfolios (2–3 cards with similar APRs), the difference is small — hundreds, not thousands.
Is credit card interest deductible?
For personal purchases: no. Under ITAA 1997 s8-1, only interest incurred in gaining or producing assessable income is deductible. A card used for personal shopping fails that test. If you genuinely use a dedicated card for business expenses or investment funding, you may be able to claim a share — but mixing personal and business spend on one card creates an apportionment headache and makes the whole claim fragile.
Practical implication: credit card interest is an after-tax cost. A $5,000 interest bill on a 30% marginal rate is equivalent to earning ~$7,150 before tax.
FAQ
How is the minimum credit card payment calculated in Australia?
Under NCCP Regulation 79B (for credit card contracts issued after 1 July 2012), minimum repayments must reduce principal — they can't just cover interest. Most issuers set the minimum as the greater of 2%–3% of the closing balance or a dollar floor of $20–$30. This calculator lets you dial both values to match your card.
What is the 'minimum-payment trap'?
Paying only the minimum on a typical 20%+ APR card can stretch a few-thousand-dollar balance across two to three decades, with total interest often exceeding the original balance. Since 2012, Australian card statements have been required to show a 'paying minimum only' timeline precisely because of this trap.
Avalanche vs snowball — which is better?
Avalanche (highest APR first) always pays the least total interest mathematically. Snowball (smallest balance first) clears individual cards faster, which helps with behavioural motivation. Our multi-card mode shows both so you can compare the dollar cost of choosing snowball.
Is credit card interest tax-deductible in Australia?
Not for personal purchases. Only interest incurred in producing assessable income is deductible (e.g. a card used solely for business expenses or income-producing investment costs). Personal credit card interest is never deductible — so every dollar of interest is a dollar of after-tax cost.
Does this calculator handle new purchases or fees?
No. It assumes no new spending, no annual fees, and a fixed APR. In practice you should stop using a card you're trying to pay off and account for annual fees separately. For balance transfers or consolidation loans, compare the promo rate and fees against the output here.
What APR should I enter?
Use the purchase APR stated on your card's key facts sheet, not the promotional or cash advance rate. AU standard card purchase rates in 2026 are typically 18%–23%; low-rate cards are 9%–14%; store cards can exceed 25%.
Tax Accuracy & Sources
Reviewed: March 2026 · Tax year: 2025-26
Models compound interest on credit card debt under Australian minimum-repayment rules (NCCP Reg 79B). The multi-card simulation applies each card's minimum first, then allocates any extra budget to the priority card under the selected strategy. Does not handle balance-transfer promos, annual fees, late fees, or new purchases.