Credit card companies design minimum payments to keep you in debt for decades. This calculator reveals the shocking truth about minimum payments—how long payoff really takes and how much extra you'll pay in interest.
How This Calculator Works
This calculator exposes minimum payment traps:
- Current Balance: How much you owe
- Interest Rate (APR): Your card's annual rate
- Minimum Payment Type: Percentage or fixed amount
- Time to Payoff: How long at minimum payments
- Total Interest: What you'll pay beyond your purchases
- Comparison: Minimum vs fixed payment scenarios
The Formula Explained
Typical Minimum Payment = Greater of: 2% of Balance OR $25-35
Monthly Interest = Balance × (APR / 12)
At minimums, most payment is interest. Balance shrinks slowly, then minimums shrink too—extending payoff further.
Step-by-Step Example
$10,000 Credit Card at 21% APR
| Payment Strategy | Monthly | Time to Payoff | Total Interest |
| Minimum (2%) | $200→$25 | 30+ years | $13,500+ |
| Fixed $200 | $200 | 9.3 years | $12,330 |
| Fixed $300 | $300 | 4.6 years | $4,927 |
| Fixed $500 | $500 | 2.4 years | $2,403 |
Minimum payments cost $11,000+ more than paying $300/month!
Frequently Asked Questions
How is the minimum payment calculated?
Most cards set minimums as the greater of: (1) A percentage of balance (typically 1-3%), OR (2) A flat minimum ($25-35). As your balance drops, so does the percentage-based minimum—keeping you paying forever. Some cards add interest + 1% of principal.
Why are minimum payments designed this way?
Credit card companies profit from interest. Low minimums keep balances high and interest flowing. They're required to disclose payoff time on statements, but many people only glance at the minimum due. It's legal but designed to maximize their profit.
How long does it take to pay off a card with minimum payments?
Disturbingly long. A $5,000 balance at 20% with 2% minimums takes 34 years to pay off—and you pay over $7,000 in interest on top of the original $5,000. Time and interest increase exponentially with higher balances and rates.
What's the minimum I should actually pay?
Pay the maximum you can afford, not the minimum. At minimum: (1) Set a fixed payment that doesn't decrease as balance drops, (2) Pay at least 3-4x the minimum if possible, (3) Aim to pay off within 2-3 years at most. Treat credit cards like short-term loans.
How much does paying double the minimum help?
Significantly! If minimum is $200, paying $400 typically cuts payoff time by more than half and saves 60%+ in interest. The relationship isn't linear—each extra dollar works overtime reducing future interest. Even $50-100 extra monthly makes substantial difference.
Why does my minimum payment include fees?
If you have late fees or over-limit fees, they're typically added to the minimum payment. This can create a trap where the minimum jumps unexpectedly. Avoid fees to keep minimums predictable—set up autopay for at least the minimum.
Should I pay minimum or save for an emergency?
Build a small emergency cushion first ($500-1,000) to avoid putting future emergencies on credit. Then attack credit card debt aggressively. Without any savings, each surprise goes on cards, perpetuating the debt cycle.
What's the best strategy for multiple cards?
Two approaches: (1) Avalanche (highest rate first): Mathematically optimal—saves most interest. Pay minimums on all, extra to highest rate. (2) Snowball (smallest balance first): Provides psychological wins. Pay minimums on all, extra to smallest balance. Either beats random payments.
Key Points to Remember
- Minimums are traps: Designed to maximize lender profit
- Fixed payments win: Don't let your payment shrink as balance drops
- Decades of debt: Minimums can stretch payoff to 30+ years
- Extra $100 matters: Small increases have huge impact
- Read your statement: Required disclosure shows minimum payoff time