How does debt interest work?
Each month, interest is added to what you owe and your payment clears that interest first. On £3,000 at 24.9% APR, about £56.10 of your first payment is interest. Pay £100 a month and only £43.90 reduces the debt.
£3,000 at 24.9% APR: what different payments cost.
| Monthly payment | Debt-free in | Total interest | Total repaid |
|---|---|---|---|
| £75 | 6 years 3 months | £2,580 | £5,580 |
| £100 | 3 years 9 months | £1,444 | £4,444 |
| £150 | 2 years 2 months | £793 | £3,793 |
| £200 | 1 year 6 months | £554 | £3,554 |
| £300 | 1 year | £353 | £3,353 |
Raising the payment from £100 to £150 saves £651 and clears the debt 1 year 7 months sooner. The first extra pounds make the biggest difference.
The same £3,000 at £100 a month, different APRs.
| APR | Debt-free in | Total interest |
|---|---|---|
| 0.0% | 2 years 6 months | £0 |
| 9.9% | 2 years 11 months | £437 |
| 19.9% | 3 years 5 months | £1,040 |
| 24.9% | 3 years 9 months | £1,444 |
| 34.9% | 4 years 9 months | £2,685 |
Moving a balance from 24.9% to 0% means every payment goes on the debt itself. Balance transfer cards usually charge a fee of around 3% of the balance; on £3,000 that would be about £90, still far less than the interest.
Interest, step by step.
- Monthly rate: a 24.9% APR is roughly 1.87% a month.
- Interest this month: £3,000 × 1.87% = £56.10.
- Your payment: £100 first covers the £56.10 interest, and the remaining £43.90 reduces the balance to £2,956.10.
- Next month: interest is worked out on the new, slightly lower balance, so a little more of each payment goes on the debt.
Card companies usually calculate interest daily on the balance, but the result is close to this monthly picture. Purchases paid off in full by the due date usually have no interest at all.
Practical ways to cut the interest.
- Pay a fixed amount, not the minimum. Minimum payments fall as the balance falls, which can stretch a debt over many years.
- Avalanche method: pay the minimum on everything, then put every spare pound on the highest-APR debt. It saves the most interest.
- Snowball method: clear the smallest balance first for a quick win. It costs a little more but helps some people keep going.
- Look at 0% balance transfers or a cheaper loan if your credit score allows.
- Get free help early from StepChange, National Debtline or Citizens Advice if payments feel unmanageable.
The debt payoff calculator shows your debt-free date and total interest for any balance, APR and payment.
Debt interest FAQs
What is persistent debt?
If over 18 months you pay more in interest, fees and charges than you repay of the balance, your card provider must contact you and help you pay it off faster. If it continues, they can suspend the card.
Is APR the same as monthly interest × 12?
Not quite. APR includes the effect of compounding and any fees, so the monthly rate is slightly less than APR ÷ 12.
Should I save or pay off debt?
Keep a small emergency buffer, then pay off expensive debt. Clearing a 24.9% card is like earning 24.9% tax-free.
FCA: persistent credit card debt · MoneyHelper: dealing with debt · StepChange (free debt advice). Figures are worked examples for planning, not financial advice.