⚠️Minimum Payment Calculator
Discover the true cost of making only minimum payments on your credit card. See how much interest you'll pay and how long it will take to become debt-free.
Frequently Asked Questions
Why is paying only the minimum payment so expensive?
Minimum payments are designed to keep you in debt longer, maximizing the bank's profit from interest. Example: $5,000 balance at 19.99% APR with 2% minimum payment takes 20+ years to pay off and costs $8,000+ in interest. Why? Most of your minimum payment goes to interest, not principal. Month 1: $5,000 × 1.67% monthly rate = $83 interest. If minimum is $100, only $17 goes to principal. You're barely making progress. Banks love minimum payers - they're the most profitable customers. Always pay more than the minimum if possible.
How is the minimum payment calculated?
Credit card minimum payments typically use one of these formulas: (1) Percentage of balance: Usually 1-3% of current balance, with a floor (e.g., $25 minimum). Example: 2% of $5,000 = $100. (2) Fixed amount: Flat payment like $35/month regardless of balance. (3) Percentage plus fees: Balance percentage + interest + fees. Example: 1% of balance + monthly interest charge. Most major issuers use method #1. The minimum decreases as your balance decreases, which is why payoff takes so long. By law, the minimum must cover at least the interest charges (otherwise your balance would grow forever).
What happens if I make a purchase while paying off debt?
New purchases increase your balance and extend payoff time significantly. Example: $5,000 debt with $100/month spending takes 33+ years to pay off at minimum payments (vs 20 years with no new purchases). Why? Interest is charged on the entire balance including new purchases. Your minimum payment barely keeps up with interest + new charges. Best strategy: Stop using the card while paying off debt. Put it in a drawer or freeze it (literally in ice). Use debit or cash instead. Once you're in debt, every swipe is a step backward. Focus on payoff first, then use the card responsibly (pay in full monthly).
How much should I pay above the minimum?
Pay as much as possible - even $50-100 extra makes a huge difference. Example scenarios for $5,000 at 19.99% APR: Minimum only ($100): 20 years, $8,000 interest. Minimum + $50 ($150): 4 years, $1,400 interest. Minimum + $100 ($200): 2.5 years, $800 interest. Fixed $250: 2 years, $600 interest. Rule of thumb: Try to pay at least 5% of your balance monthly. Even better: Pay the total new purchases each month to prevent balance growth. Use the avalanche method: Pay minimums on all cards, then put extra toward the highest APR card. Every dollar above minimum saves $2-3 in interest.
Can minimum payments hurt my credit score?
Paying only minimums doesn't directly hurt your credit score (you're not late), but it has indirect negative effects: (1) High credit utilization: If you're using 30%+ of your credit limit, your score drops. Minimum payments keep utilization high for years. (2) Length of debt: Chronic debt may signal financial stress to lenders. (3) Opportunity cost: High balances prevent you from getting new credit or better rates. Positive side: On-time minimum payments do build positive payment history (35% of your score). But it's a trap - you're paying thousands in interest just to maintain your score. Better strategy: Pay balances in full, keep utilization under 10%, and your score will soar while saving money.
Why Use This Calculator?
Minimum Payment Trap Revelation
$5,000 balance at 24% APR, $125 minimum payment = 7 years payoff, $4,700 interest paid (nearly doubling debt). Minimum designed to maximize bank profit, not help you. Calculator exposes true cost - seeing 7 years + $4,700 motivates aggressive payoff instead.
Extra Payment Impact Projection
$5k at 24%, minimum $125 vs $250 payment. Minimum = 7 years + $4,700 interest. Double payment = 2 years + $1,300 interest. Extra $125/month saves $3,400 and 5 years. Small increase, massive savings. Calculator shows exact impact of paying more.
True Payoff Timeline Calculation
Statement says "Pay $125 this month." Doesn't say "You'll be paying for 84 months." Calculator reveals: $125 minimum = 2031 payoff date (7 years from now). Shocking reality check motivates change. Hidden timeline exposure crucial for decision-making.
Interest vs Principal Breakdown
$5k balance, $125 minimum: $100 interest + $25 principal first month. 80% goes to interest, 20% to debt. After 1 year (12 × $125 = $1,500 paid), balance only drops to $4,700 ($300 reduction). Barely making progress despite $1,500 payments. Calculator shows this trap.
Multiple Card Payoff Strategy
3 cards: $5k (24%), $3k (22%), $2k (19%). Minimums = $315, 9+ years. Calculator models: Pay minimums on 2 cards, attack 1 aggressively = 3 years total. Shows which card to attack first and projected elimination dates for all debts.
Opportunity Cost of Minimum Payments
$5k at 24%, minimum $125 for 7 years = $10,500 total paid. Alternative: Pay $250/month for 2 years = $6,300 paid, then invest freed $250/month for 5 years at 8% = $18,000 invested becomes $25,000. Minimums cost $18,700 in lost wealth ($25k - $6.3k).
Step-by-Step Guide
Find Current Balance and APR
Check credit card statement for current balance and APR. Balance: $5,000. APR: 24.99%. These two numbers determine minimum payment calculation. Most cards: 1-3% of balance or $25 minimum (whichever higher). $5k at 2% = $100 minimum, but interest adds to it.
Example:
Example: $5,000 balance at 24.99% APR on statement
Identify Minimum Payment Formula
Common formulas: (1) 1% balance + monthly interest. (2) 2-3% of balance. (3) $25 minimum floor. Example: $5k at 24% = $100 interest/month. Formula: 1% ($50) + interest ($100) = $150 minimum. Or 3% balance = $150. Check statement for your card's specific formula.
Example:
Example: 1% balance + interest = $50 + $100 = $150 minimum
Calculate Monthly Interest Charge
Monthly interest = Balance × (APR ÷ 12). $5,000 × (24% ÷ 12) = $5,000 × 0.02 = $100/month interest. This interest adds to balance if not paid. Minimum payment must cover at least interest + small principal to make progress. Under-pay interest = balance grows.
Example:
Example: $5,000 × 2% monthly = $100 interest per month
Determine Actual Minimum Payment Required
Most cards: Greater of (1% balance + interest) OR ($25). $5k example: 1% balance = $50, interest = $100, total $150 minimum. Or 2.5% balance = $125. Card uses $150 (higher amount). Check statement - different issuers use different formulas.
Example:
Example: $150 minimum (1% + interest) vs $125 (2.5% balance)
Project Total Payoff Timeline With Minimums
$5k at 24% APR, $150 minimum decreasing as balance drops: Month 1 balance $5k, Month 12 = $4.7k, Month 24 = $4.2k, Month 60 = $2k, Month 84 (7 years) = $0. Progress painfully slow due to shrinking minimums + high interest. Calculator shows exact month-by-month breakdown.
Example:
Example: 84 months (7 years) to pay $5k with minimums only
Calculate Total Interest Paid
$5k balance, minimum payments for 7 years: Total paid = $10,500 ($5k principal + $5,500 interest). Interest = 110% of original balance. Paying more than double the initial debt due to compound interest + slow payoff. Calculator reveals shocking total cost.
Example:
Example: $5k becomes $10,500 total paid (110% interest markup)
Model Extra Payment Scenarios
Test fixed payments above minimum. Scenario A: $150 minimum only = 7 years. Scenario B: Fixed $200 = 3.5 years, $2,600 interest. Scenario C: Fixed $300 = 2 years, $1,400 interest. Extra $50-150/month cuts payoff time in HALF or more. Calculator shows exact impact.
Example:
Example: $200 fixed vs $150 minimum = 3.5 years saved
Calculate Break-Even Monthly Payment
What fixed payment = 3 year payoff goal? Formula: Balance ÷ desired months + average monthly interest. $5k ÷ 36 months = $139 principal + ~$50 average interest = $189/month for 3-year payoff. Calculator reverse-engineers required payment for any timeline goal.
Example:
Example: Need $189/month fixed payment for 3-year payoff
Compare Minimum vs Aggressive Payoff Side-by-Side
Minimum: 7 years, $10,500 total. Aggressive ($300/month): 2 years, $6,400 total. Savings: $4,100 + 5 years. Visual comparison shocking - same debt, dramatically different outcomes. Most people never see this comparison until calculator reveals it. Motivates change immediately.
Example:
Example: Aggressive saves $4,100 and 5 years vs minimums
Model Balance Transfer Impact
$5k at 24% minimum = 7 years, $10,500 paid. Transfer to 0% for 18 months (3% fee = $150), pay $300/month = paid off in 17 months, total $5,150. Saves $5,350 vs staying at 24%. Calculator shows if balance transfer worthwhile for your situation.
Example:
Example: 0% transfer saves $5,350 vs 24% minimums
Expert Tips & Strategies
Never Pay Just the Minimum - Triple It If Possible
$150 minimum becomes $450 fixed payment = 16 months payoff vs 84 months. 3× payment = 5× faster payoff (non-linear due to interest savings). If can't triple, even 1.5-2× minimum makes huge difference. Any extra payment better than minimums. Minimums = permanent debt trap.
Pay Fixed Amount Not Shrinking Minimum
Minimums decrease as balance drops: Month 1 = $150, Month 12 = $140, Month 24 = $120. Shrinking payments slow progress. Lock in $150 fixed payment throughout payoff. Constant payment = accelerating principal reduction as interest portion shrinks. Fixed payments cut payoff time 40-60%.
Pay Twice Monthly to Reduce Average Daily Balance
Paying $300 once/month vs $150 twice/month (same total). Twice monthly = lower average daily balance = less interest charged. Interest calculated daily on balance. Reducing balance earlier saves $50-150 over payoff period. Small habit, meaningful savings on large balances.
Transfer to 0% APR Card to Eliminate Interest
$5k at 24% = $100/month interest wasted. Transfer to 0% for 18 months (3% fee $150), pay $300/month = $5,400 paid off during promo, $150 total cost vs $3,000+ interest. 0% transfer perfect for motivated payoff. Must pay off during promo or loses benefit.
Use Debt Avalanche Method for Multiple Cards
Card A: $3k at 28%, Card B: $5k at 18%. Pay minimums on B, attack A aggressively. Eliminating 28% rate saves more than 18%. After A paid, redirect payment to B. Mathematically optimal - saves most interest. Vs debt snowball (smallest first) which saves less but provides psychological wins.
Round Up Payments to Nearest $50 or $100
Minimum $147? Pay $150 or $200. Rounding up adds $3-50/month, barely noticeable but compounds. $50 extra/month on $5k = saves $1,000+ interest and 12+ months. Mental ease of round numbers + meaningful acceleration. Small rounding, big impact over time.
Automate Fixed Payment Above Minimum
Set autopay for fixed $250 not minimum $150. Prevents temptation to pay less when cash tight. Forced consistency = guaranteed progress. Missing payments = late fees + penalty APR disaster. Autopay fixed amount = discipline on autopilot. Can always pay extra manually.
Use Windfalls to Make Lump Sum Payments
Tax refund $2,000? Apply entirely to $5k balance = drops to $3k immediately. Remaining $3k at $200/month = 17 months vs $5k = 30 months. Windfall saves 13 months payoff time. Don't waste refunds on vacation - buy debt freedom. One lump sum = massive acceleration.
Common Mistakes to Avoid
✓ Better approach: $5k balance, paying $150/month minimums, thinking "I'm handling it." After 1 year (12 payments = $1,800 paid), balance still $4,700 ($300 reduction only). Barely moved despite $1,800 paid. Minimums = illusion of progress. Need 2-3× minimum minimum to make real dent.
✓ Better approach: Following shrinking minimum: Start $150, drops to $100 after 2 years, then $75. Lower payments = slower progress = longer debt sentence. Lock payment at original $150 throughout payoff. Constant payment crucial - don't let banks slow your progress by offering lower minimums.
✓ Better approach: Paying $150 minimum but charging $200 new purchases monthly = balance grows $50/month despite payments. Running on treadmill going backward. Stop using card during payoff. Cash/debit only. Cannot outrun debt while creating more. Freeze card until $0 balance.
✓ Better approach: $150 minimum seems like progress. But $100 interest + $50 principal = only $50 actually reduces debt. 2/3 of payment wasted on interest. After $1,800 paid (12 months), only $600 reduced balance. Don't assume full payment reduces debt - mostly interest at first.
✓ Better approach: Aggressively paying Card A minimums while paying only minimums on Card B (higher APR). Should pay minimums on low APR, attack high APR first (avalanche method). Paying wrong card first costs hundreds in unnecessary interest. Prioritize highest rate, not largest balance or lowest balance.
✓ Better approach: Skipping $150 minimum = $40 late fee + penalty APR 29.99% + credit score drops 60-110 points. One missed payment costs $500-1,000+ in fees, higher interest, credit damage. Minimum is MINIMUM requirement - never skip. Set autopay to prevent accidental misses.
✓ Better approach: Assuming paying extra doesn't matter much. $200 vs $150 minimum seems small ($50 difference). But $50 extra = 3.5 years faster payoff + $2,000 interest savings. Never realize potential without calculating. Use calculator FIRST to see impact, then commit to higher payment. Knowledge motivates action.
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Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.