If you only make the minimum payment on your credit card, the bank wins. This calculator shows you in cold, hard numbers exactly how many years 鈥?and how much interest 鈥?you'll lose if you keep paying the minimum.
How This Calculator Works
Each month, the calculator does what your bank does:
- Calculate this month's interest:
balance 脳 (APR / 12)
- Calculate the minimum payment:
max(balance 脳 min%, $25 floor)
- Apply the payment 鈥?interest first, then a tiny sliver of principal
- Repeat for the next month with the new (slightly smaller) balance
Because minimum payments shrink as the balance shrinks, the payoff timeline is much longer than you'd expect. A $5,000 balance at 22% APR with a 2% minimum payment takes over 20 years to clear 鈥?and you'll pay roughly the original balance again in interest.
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Frequently Asked Questions
Why does the minimum payment take so long to pay off debt?
Because the minimum is a percentage of the balance, it shrinks every month. As the balance gets smaller, your payment gets smaller too 鈥?and an ever-larger share of each payment goes to interest. By the last few years, you're paying pennies of principal per month.
Is paying just the minimum a credit score problem?
Paying the minimum on time won't hurt your score directly 鈥?payment history stays clean. But carrying a high balance for years keeps your credit utilization elevated, which is the #2 factor in your FICO score (about 30% weight).
How much should I actually pay each month?
Aim to pay your full statement balance every month. If you can't, target at least 2鈥?脳 the minimum. A useful rule: if you can pay off your card in 24 months, your interest costs stay manageable. Use our Debt Payoff Calculator to see exactly what monthly amount gets you there.
Are minimum payment rules the same in the UK and Australia?
Similar but not identical. UK regulators require minimums to cover at least the interest plus 1% of principal. Australia requires roughly 2% of the balance or $20 AUD, whichever is higher. The math in this calculator works for all three regions 鈥?just adjust the inputs.
Can my credit card company increase my minimum payment?
Yes, with 45 days' notice in the U.S. (under the CARD Act of 2009). After the 2008 financial crisis, several major issuers doubled their minimum payment percentages. Higher minimums actually help you escape faster 鈥?it's not always bad news.