How to use the calculator
- Enter the balance on your latest statement, leaving out cash advances and any instalment plans.
- Enter the monthly interest rate and the minimum payment rule from your statement or the card's Key Facts Statement: the percentage of the balance and, if there is one, the fixed amount you pay when that is higher.
- Add a fixed monthly amount to compare it with paying only the minimum.
The calculator has no default rate or minimum rule. Both are set by each bank, so a figure typed in for you would not be your card's.
How the payoff is worked out
The calculator follows the card month by month, with no new spending:
Minimum only: payment = minimum % × statement balance, or the "at least" amount if that is higher
Fixed plan: payment = your fixed amount
Unpaid = statement balance − payment
Next statement balance = unpaid + unpaid × monthly rate
It stops when the balance is paid. The balance falls only while each payment is more than the interest added since the last statement. If a payment does not cover that interest, the balance can never be cleared, and the calculator says so instead of counting on. It also stops after 100 years and reports that the plan takes longer.
To clear the balance in a set number of months with the same payment each month:
Payment = B × r ÷ ((1 + r) × (1 − (1 + r)−n))
B is the statement balance, r the monthly rate and n the number of months. At 0% it is the balance divided by the months.
The Central Bank rules on card interest
Paying the full statement balance by the due date keeps purchases free of interest:
Pay in full, no interest
Pay in full, no interest
Banks must not charge interest on a credit card balance (excluding cash advances) when the statement balance is paid in full by the payment due date.
- Applies to
- CBUAE-licensed financial institutions; credit cards
- Source
- CBUAE Consumer Protection Standards (Notice 1158/2021), Article 7: Responsible Financing Practice, Central Bank of the UAE
- Checked
After a part payment, interest is charged on the outstanding balance from the due date until it is paid. The calculator charges a month's interest on whatever is left unpaid after each payment.
No interest on interest
No compounding
Lenders may not charge interest or profit on accrued interest on any consumer credit product, and may not charge future unearned interest after a loan is fully settled early; after a partial early settlement, interest must be adjusted to the remaining principal.
- Applies to
- CBUAE-licensed financial institutions, consumer credit products
- Source
- CBUAE Consumer Protection Standards (Notice 1158/2021), Article 7: Responsible Financing Practice, Central Bank of the UAE
- Checked
In the calculator each payment covers the month's interest before it reduces the balance, so while the balance is falling no unpaid interest is carried forward.
Minimum payment warning on statements
Mandatory warning
Credit card statements must show how long it would take to clear the balance by paying only the minimum, the minimum due, and a warning that minimum-only payments cost more and take longer.
- Applies to
- CBUAE-licensed financial institutions; credit cards
- Source
- CBUAE Consumer Protection Standards (Notice 1158/2021), Article 2: Disclosure and Transparency, Central Bank of the UAE
- Checked
Missing the minimum payment by the due date can bring a late payment fee on top of the interest. The Central Bank caps it, before VAT:
Credit card late payment fee cap
AED 230
The late payment fee on a credit card is capped at AED 230.
- Applies to
- Banks and finance companies licensed by the CBUAE (conventional and Islamic), lending to individuals; credit cards
- Source
- CBUAE Regulation No. 29/2011 Regarding Bank Loans & Other Services Offered to Individual Customers, Appendix No. (2): Maximum Limits for Fees and Commissions, Central Bank of the UAE
- Checked
Worked example
Worked example
Balance AED 10,000, minimum only compared with AED 500 a month
The 3% monthly rate and the minimum rule of 5% or AED 100, whichever is higher, are illustrations, not market figures or any bank's terms. No new spending and no fees.
- First minimum payment: 5% × AED 10,000 = AED 500, which is more than AED 100.
- Unpaid: AED 9,500. Interest for the month: AED 9,500 × 3% = AED 285, so the next statement shows AED 9,785.
- Repeating this, paying only the minimum clears the card in 8 years 8 months at a cost of AED 11,560.16 in interest.
- Paying AED 500 every month clears it in 2 years 6 months, with AED 4,777.95 of interest.
A fixed AED 500 a month clears the balance 6 years 2 months sooner and saves AED 6,782.21 in interest.
At the same rate, AED 975.36 a month would clear the balance in a year. Enter your own card's figures in the calculator to see yours.
What the result leaves out
- New spending. Anything you add to the card makes the payoff longer.
- Fees and cash advances. Annual and late fees are not included, and cash advances are outside the pay-in-full rule.
- Instalment plans and balance transfers. These have their own terms. Leave them out of the balance you enter.
- Days and rate changes. The calculator uses equal months and keeps the rate fixed, so a bank's figures will differ a little.
- Other minimum rules. If your card's minimum is worked out another way, use the fixed amount field to test a payment you know.
Note
Card repayments count towards your debt burden ratio with all your other loans. To check how much room you have, use the debt burden ratio calculator. Interest and fees on cards are explained in credit card interest and fees, moving a balance to another card in credit card balance transfers, and what happens after a missed payment in missed loan and card payments.