Why are minimum payments so low?

Banks make more money the longer you're in debt. Low minimums (2-3% of balance) ensure you pay interest for years or decades. It's by design.

What happens if I only pay the minimum?

You'll be in debt for decades and pay 2-3x the original balance in interest. A $5,000 balance can cost over $13,000 with minimums only.

How much should I really pay?

At minimum, try to pay the interest portion plus some principal. Better: set a fixed amount that pays off the balance in 1-2 years. Even $50 extra makes a huge difference.

Minimum Payment Calculator

Calculator

See how long it takes to pay off debt with minimum payments only

Free to useNo data storedAI insightsUpdated: February 2026

The minimum payment trap is real. Banks design minimums to maximize their interest income. This calculator shows you the shocking truth about paying only the minimum.

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Real-World Examples

Minimum Payment Trap

$5,000 balance at 20% APR, paying 2% minimum (starts at $100, decreases over time).

Inputs Used:

balance:5,000rate:20min:2%

Time to payoff: 27 years! Total interest: $8,396. You'd pay $13,396 for a $5,000 balance. With fixed $200/month: 2.5 years, $1,364 interest.

Frequently Asked Questions

Glossary

Minimum Payment

The smallest amount you must pay monthly to avoid late fees, usually 2-3% of balance or $25.

Principal

The original amount borrowed, excluding interest. Minimum payments barely touch this.

Amortization

How payments are split between interest and principal over time.

Related Tools

Payoff Calculator

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Interest Calculator

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Balance Transfer

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How to Use

1Enter your current credit card balance
2Add your card's interest rate
3Select how your minimum is calculated
4Optionally add extra monthly payment
5Compare payoff time and interest

Key Information

Minimum payments are designed to keep you in debt longer
A $5,000 balance can take 20+ years with minimums only
Most of your minimum goes to interest, not principal
Even small extra payments dramatically reduce time

Pro Tips

Always pay more than the minimum - any amount helps
Round up minimums to the nearest $50 or $100
Set a fixed payment amount instead of the minimum
Consider a balance transfer to accelerate payoff

Avoid These Mistakes

Thinking minimum payments are 'enough'
Not realizing how much goes to interest
Assuming the balance will shrink quickly
Not setting up extra automatic payments

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026