Minimum Payment Calculator
See the true cost of making only minimum payments on your credit card. Compare payoff timelines with fixed payment amounts to find your best strategy.
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Most cards use 1-3%
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See the shocking truth about minimum payments vs. fixed payments
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Pro Tip
Set up autopay for a fixed amount well above the minimum. Pick an amount you can afford, then pretend your minimum is that fixed number. Never let the credit card company decide your payment.
Create a Debt Payoff Plan →The Minimum Payment Trap
Credit card minimum payments are designed to be just barely enough to keep your account current -- and to maximize the interest the card issuer earns. The typical minimum payment is 1-3% of your balance or a fixed amount like $25, whichever is greater. On a $6,000 balance at 22.99% APR, a 2% minimum payment starts at $120 -- but only about $5 of that first payment goes toward paying down your actual debt.
This is known as the "minimum payment trap." Because minimum payments decline as your balance decreases (when calculated as a percentage), the payoff timeline stretches enormously. That $6,000 balance could take over 30 years to pay off with minimums, costing more than $10,000 in interest -- nearly double the original debt.
The Credit CARD Act of 2009 now requires credit card statements to show how long it would take to pay off your balance with minimum payments, and what it would cost. It also must show the payment needed to pay off the balance in 3 years. This disclosure was eye-opening for many consumers.
Switching to a fixed monthly payment -- even a modest one like $200 -- makes a dramatic difference. Instead of declining each month, a fixed payment maintains its power against the balance. The higher the fixed payment, the faster you eliminate the debt and the less total interest you pay.
If you cannot afford large payments, even adding $50 per month above the minimum makes a significant difference. The key is to pay a consistent, fixed amount rather than letting the credit card company set your payment.
How Minimum Payments Work
Minimum Payment Calculation
Where:
Balance = Current outstanding balance
Min% = Minimum payment percentage (typically 1-3%)
Floor = Minimum dollar amount (typically $25)
Monthly Interest = Balance x (APR / 12)
Example
$6,000 balance at 22.99% APR with 2% minimum payment:
- • Initial minimum payment = max($6,000 x 2%, $25) = $120.00
- • First month interest = $6,000 x (22.99% / 12) = $114.95
- • Principal paid = $120.00 - $114.95 = $5.05
- • At minimums only: ~379 months (31.5 years), ~$10,400 in interest
- • At $200/month fixed: ~39 months (3.3 years), ~$1,700 in interest
- • Savings from $200/month: ~$8,700 in interest, ~28 years sooner