$120.00
$105.00
$15.00
2.00
%
43
months
$8,600.00
$2,600.00
1.9
x
$120.00
$105.00
$15.00
2.00
%
43
months
$8,600.00
$2,600.00
1.9
x
The Credit Card Minimum Payment Calculator reveals the true cost of paying only the minimum on your credit card. Most issuers calculate the minimum payment as the greater of a percentage of your balance (typically 1-3%) or a fixed floor amount ($25-$35). This calculator shows exactly how that payment breaks down between interest and principal — and how long minimum payments take to eliminate the debt.
The minimum payment trap is one of the most costly financial pitfalls consumers face. Credit card companies are required by the CARD Act of 2009 to disclose the minimum payment consequences on each statement, but many consumers do not read or understand these warnings. The harsh reality: paying the minimum on a $6,000 balance at 21% takes over 25 years and costs more than $8,000 in interest — more than the original debt.
Understanding the breakdown between interest and principal is eye-opening. On a $6,000 balance at 21%, the minimum payment of $120 (2% of balance) allocates $105 to interest and only $15 to principal. That means 87.5% of your minimum payment goes straight to the bank as interest, and only 12.5% reduces your balance. This ratio slowly improves over time as the balance decreases, but the early years are overwhelmingly interest-heavy.
The floor payment ($25-$35) becomes especially problematic as the balance decreases. When the calculated percentage drops below the floor, the floor payment actually represents a higher percentage of the balance, which accelerates the final payoff. This is why the last $1,000 of credit card debt pays off much faster than the first $1,000.
Use this calculator to understand why minimum payments are a debt trap, then use the Credit Card Payoff Calculator to set a target date and calculate a payment that will get you debt-free in a reasonable timeframe.
Minimum Payment = max(Balance × Min%, Floor Payment). Typically: max(balance × 2%, $25).
Interest Portion = Balance × (APR / 12 / 100). Principal Portion = Minimum Payment − Interest Portion.
Payoff time at minimum: n = −log(1 − r × B / MinPay) / log(1 + r).
If more than 50% of your minimum payment goes to interest, you are barely making progress. Doubling your minimum payment can cut payoff time by 70-80% and save thousands in interest. Even paying $25-$50 above the minimum makes a dramatic difference.
Inputs
Results
Minimum of $120 on $6,000 at 21%: $105 goes to interest, only $15 to principal. Over 31 years to payoff.
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Results
Even $1,000 at 24% with $25 minimums takes ~13 years and costs $2,850 in interest.
Most issuers use: max(Balance × 1-3%, $25-$35). Some add current interest and fees to a flat 1% of principal. Check your cardholder agreement for the exact formula.
Low minimums benefit card issuers because they maximize interest revenue. The CARD Act of 2009 requires issuers to show the true cost of minimums on statements, but the payments themselves remain low by design.
At typical rates (20%+), 70-90% of the minimum payment goes to interest when the balance is high. For a $5,000 balance at 20%, about $83 of a $100 minimum goes to interest.
Decades. A $5,000 balance at 20% with 2% minimums takes about 25-30 years. The total interest often exceeds the original balance — you effectively pay for your purchases 2-3 times over.
It decreases as your balance decreases (since it is a percentage of the balance). This means you pay less each month, but payoff stretches longer. Fixing your payment at the initial minimum amount speeds up payoff.
You will be charged a late fee ($25-$40), your APR may increase to the penalty rate (up to 29.99%), and the late payment will be reported to credit bureaus after 30 days, damaging your credit score.
Yes, always. Even $25-$50 above the minimum significantly reduces payoff time and interest. Paying the full statement balance each month avoids all interest charges.
The Credit CARD Act of 2009 requires issuers to show on each statement: how long it takes to pay off with minimums, total cost with minimums, and the payment needed to pay off in 3 years.
Paying the minimum keeps your account current (no late payment), but maintaining a high balance hurts your utilization ratio. For best credit scores, keep utilization below 30% (ideally below 10%).
The floor payment ($25-$35) is the minimum amount you must pay regardless of the percentage calculation. It kicks in when the percentage-based minimum drops below this floor as your balance decreases.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
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