What does that $500 TV really cost?

Punch in any credit card purchase and see what you'll actually pay after interest — including the multiplier the receipt never showed you.

Run the numbers

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Your purchase actually costs —

— true cost multiplier
Total interest: —
Months to pay off: —

A snapshot, not the whole story

This calculator is a snapshot in time. In the Pay Down app, your true cost changes every time you make a purchase or payment. Purchases compound at different APRs depending on type (purchase APR vs cash advance vs balance transfer vs penalty). Payments are allocated by bank FIFO rules. The app connects to your card and recalculates your effective rate in real time — so the number you see always reflects the truth, not last month's snapshot.

See your real numbers in the app

Pay Down does this math across every card and every purchase, automatically.

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Understanding the true cost of a credit card purchase

What is "true cost"?

Most people think of a credit card purchase by its sticker price. You buy a $500 television and you assume the television cost you $500. The receipt agrees. Your statement agrees. The next month, you make your minimum payment and the balance moves a little, but no one ever totals it up for you.

At Pay Down we use the term true cost to mean exactly what it sounds like — the original price plus every dollar of interest you actually end up paying because the balance was carried instead of paid in full. If that $500 TV took you eighteen months to pay off at a typical APR, the true cost might be closer to $620. The extra $120 is real money, and it left your account in slow drips you barely noticed.

A "true cost multiplier" expresses the same idea as a ratio. A multiplier of 1.00 means you paid the sticker price; the balance never carried. A multiplier of 1.24 means every dollar you charged actually cost you a dollar and twenty-four cents. The receipt only shows the first dollar.

Why the answer usually surprises people

There's a gap between how we intuitively reason about interest and how it actually works. Most people anchor on the APR — "24%" — and mentally translate that into "a quarter of the purchase price, total." That isn't the trap. The trap is what happens to the part you don't pay.

Every month you don't pay off the balance in full, the bank charges you interest on what's left. That interest gets added to the balance. Next month, the new balance — including last month's interest — gets charged interest again. The dollars stay small, but they don't stop. A balance you keep around for two or three years has been silently accumulating interest charges the whole time, and at the speed minimum payments move, that's exactly what happens to most people.

Consider three purchases at 24% APR, each paid down at $50 a month:

  • $500 — paid off in about 12 months, total interest around $63. Multiplier: roughly 1.13.
  • $1,500 — paid off in about 47 months, total interest around $828. Multiplier: roughly 1.55.
  • $3,000 — never pays off at $50/month. The interest alone is $60/month at the start.

Those aren't extreme examples. They're a fairly typical mid-tier card and a payment number a lot of people pick because it feels manageable. The third one — where the payment is smaller than the interest charge — is the silent killer, and it's why this calculator has a warning built into it.

How credit card interest actually compounds

Card issuers compute interest using what's known as the average daily balance method. Every day, they note what your balance was at the end of that day. At the end of the billing cycle, they average those daily balances and multiply by the daily periodic rate — your APR divided by 365 — times the number of days in the cycle.

That's a long sentence, so here's the practical version: interest depends on how much you owe and how many days you owe it. Paying earlier in the cycle reduces the average daily balance. Making a purchase later in the cycle has less of an interest impact this month but adds principal that compounds going forward.

This calculator uses a simplified monthly approximation — interest is charged once a month on the remaining balance, and your fixed monthly payment is applied immediately after. That's close enough to give you a clear picture of where your money is going. The Pay Down app uses the actual cycle-by-cycle math against your real statement dates so the numbers match reality more precisely.

A small monthly payment isn't slow progress on a big balance — it can be no progress at all. The minimum-payment trap is real, and it's mathematical, not moral.

What this calculator doesn't tell you

A single-purchase, single-APR calculator like this one is a great way to feel how the math works. It's also a deliberate simplification. The real world has a few wrinkles this calculator doesn't model:

  • Multiple APR buckets. A single card often carries balances at different rates — purchases at one APR, cash advances at a much higher one, balance transfers at a promotional rate that may expire.
  • FIFO payment allocation. The CARD Act requires that payments above the minimum go to your highest-APR balance first. Which balances pay down first depends on rules, not on which purchase you'd intuitively pay off.
  • New purchases. Every time you swipe the card, you add principal. The true cost of last month's purchases gets a little higher because the balance you're paying interest on just grew.
  • Multiple cards. Most people carrying credit card debt have two or three. The picture is the sum of all of them, not just the one with the biggest balance.

This is what the Pay Down app is built to handle. It connects to your cards or imports your statements, tracks every purchase and every payment, and recomputes the true cost of every transaction continuously. The answer this calculator gives you is a snapshot of a single purchase at a single moment. The answer the app gives you is the whole picture as it stands today.

Frequently asked questions

What is "true cost"?

True cost is the original purchase price plus all the interest you'll actually pay carrying that balance until it's paid off. A $500 purchase at 24% APR with a $50 monthly payment ends up costing about $620 — the extra $120 is the true cost the receipt never showed you.

What APR should I use?

Use your card's purchase APR — it's listed on every statement and in your card agreement. Cash advances and balance transfers usually have different (often higher) rates; if the balance you're calculating came from one of those, use that rate instead.

Why is the true cost higher than just the interest?

It isn't — true cost equals purchase amount plus total interest. People are usually surprised by how big that interest number is, because credit card interest compounds month after month on a balance that shrinks slowly when payments are low.

Does this account for minimum payments?

No. This calculator uses a fixed monthly payment you choose. Minimum payments typically change each month based on your balance, so they're not directly modeled here. If your payment is less than the monthly interest, the calculator will warn you that the balance never gets paid off.

What if I make extra payments?

Try a higher monthly payment number — even an extra $25 or $50 a month dramatically cuts both the months to payoff and the total interest. The Pay Down app lets you model one-time extra payments too.

How is this different from the Pay Down app?

This calculator is a single-purchase snapshot at one APR. The Pay Down app tracks every purchase on every card, applies FIFO payment allocation across multiple APRs (purchases, cash advances, balance transfers), and recalculates your true cost in real time as you make new purchases and payments.