How minimum payments are calculated
Each issuer sets its own formula, but common ones are:
- 1% of the balance plus that month's interest and fees, or
- 2% to 3% of the balance,
- with a floor — often around $25 to $40 — or the full balance if it is smaller.
Under the federal CARD Act, your statement must show how long it would take to pay off the balance with minimum payments only, and how much you'd pay in total.
Example
A $5,000 balance at 22.9% APR:
| Strategy | Time to pay off | Interest |
|---|---|---|
| Minimum only (1% + interest, $25 floor) | about 19 years | over $8,000 |
| Fixed $200 a month | 35 months | about $1,860 |
Check your own card in the credit card payoff calculator.
Beat the minimum
- Pay a fixed amount every month instead of the shrinking minimum.
- Use the debt avalanche or debt snowball to direct extra money.
- Turn on autopay for at least the minimum so you never miss a due date.
Frequently asked questions
What happens if I only pay the minimum?
You avoid late fees and damage to your credit, but most of each payment goes to interest. A $5,000 balance at 22.9% APR can take almost 20 years and more than $8,000 of interest if you only pay a typical minimum.
What happens if I pay less than the minimum?
The payment counts as late: you can be charged a late fee, lose a promotional rate or face a penalty APR, and a payment 30 or more days late can be reported to the credit bureaus.
Why does my minimum payment go down?
Because it is usually a percentage of the balance. As the balance falls, so does the minimum — which slows your progress unless you keep paying the same fixed amount.
Written by
Finance Specialist & Editor, VaultlyApps
Researched against primary US sources and reviewed by a finance expert on our team. Written for US readers — general education, not financial, tax or legal advice. Editorial policy · Disclaimer
