Minimum Payment Calculator
Minimum payments keep you in debt much longer than you might think. See what paying only the minimum really costs you over time.
Enter your details to see the shocking difference.
| Minimum Payments | Your Payment | You Save | |
|---|---|---|---|
| Time to Payoff | — | — | — |
| Total Interest | — | — | — |
| Total Paid | — | — | — |
| First Payment | — | — | — |
What Is a Minimum Payment?
Typically, the minimum payment is 2% of your balance or $25, whichever is greater. Different card issuers may use different formulas (1-2% of balance, interest+fees+portion of principal, or a fixed dollar amount).
Example: On a $5,000 balance at 24.99% APR:
- Minimum payments (2% of balance or $25): At 24.99% APR, the 2% minimum payment may be less than or close to the monthly interest — so this balance could take decades to pay off. Even a small increase in your monthly payment makes a dramatic difference.
- $200 fixed payment: 36 months and $2,135 in interest
When the minimum barely covers interest, paying just the minimum can stretch a short-term debt into a multi-decade obligation.
How Minimum Payments Are Calculated
Credit card minimum payments are typically calculated as the greater of a flat dollar amount (usually $25-$35) or a percentage of your balance (usually 1%-3%) plus any interest and fees for the month. Some issuers use a different formula: interest + 1% of principal + fees. Understanding your card's specific formula is important because minimum payments are designed to keep you in debt for as long as possible.
For example, with a $5,000 balance at 24% APR and a 2% minimum payment formula: your first minimum payment would be about $150 ($100 principal + $50 interest). Each month, as your balance decreases, your minimum payment also decreases — which means less of your payment goes toward principal, extending your payoff timeline dramatically.
The Hidden Cost of Minimum Payments
Minimum payments are the most expensive way to pay off credit card debt. Here's a sobering comparison on a $5,000 balance at 24% APR:
- Minimum payment only (~$100/month decreasing): Takes 26+ years, costs $7,700+ in interest
- Fixed $150/month: Takes 4.5 years, costs $3,000 in interest
- Fixed $250/month: Takes 2 years, costs $1,100 in interest
- Fixed $500/month: Takes 1 year, costs $500 in interest
The difference between paying the minimum and paying a fixed $250 per month is over $6,500 in interest savings and 24 years of debt freedom.
Breaking the Minimum Payment Cycle
To escape the minimum payment trap, commit to paying a fixed amount each month rather than the declining minimum. Even if you can only afford $50 above the minimum, that extra amount goes directly toward reducing your principal, accelerating your payoff. As your financial situation improves, increase your payment amount. Consider using windfalls like tax refunds, bonuses, or gifts to make lump-sum payments toward your balance. Every extra dollar you pay above the minimum saves you money and time.