Minimum Payment Calculator
See the shocking truth about credit card minimum payments. Calculate how long it will take to pay off your balance and how much interest you'll pay.
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Minimum Payment Impact
Warning: The True Cost of Minimum Payments
Paying only the minimum could cost you thousands in interest and take decades to pay off.
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The Minimum Payment Trap
Credit card companies love minimum payments because they maximize interest profits. Here's a shocking example:
- $5,000 balance at 19.99% APR
- Minimum payment (2%): Starting at $100, decreasing over time
- Payoff time: Over 25 years!
- Total interest: Over $7,000!
That $5,000 purchase ends up costing over $12,000!
How Minimum Payments Are Calculated
Most credit card companies calculate minimum payments as:
- 1-3% of the outstanding balance, OR
- A fixed dollar amount (usually $25-35), whichever is higher
As your balance decreases, so does your minimum payment, stretching out the debt for years.
Strategies to Escape the Trap
- Pay a fixed amount: Keep paying the same amount even as minimum drops
- Add just $50: Even small extra payments dramatically reduce payoff time
- Use the avalanche method: Focus extra payments on highest-rate cards
- Consider consolidation: Lower-rate loan to pay off high-rate cards
Frequently Asked Questions
You'll stay in debt much longer and pay significantly more in interest. Minimum payments are designed to maximize bank profits, not help you become debt-free quickly.
Only in true financial emergencies. Otherwise, always pay as much as you can above the minimum. Even $25-50 extra per month can save years of payments and thousands in interest.
Make minimum payments on all cards to avoid penalties, then put all extra money toward one card (either the highest interest rate for mathematical efficiency, or the smallest balance for psychological wins).