A common credit card minimum payment is that month's interest plus 1% of the balance, never less than $25. With this formula at 24%, the first minimum is $90 on a $3,000 card, $300 on $10,000 and $900 on $30,000. Your own card's formula may differ, and your card agreement states it.
How a common minimum payment is worked out
Many card issuers use a recipe like this one, and it is the example behind this site's minimum payment calculator:
- Work out that month's interest on the balance.
- Add 1% of the balance.
- If the total comes to less than $25, the minimum is $25 instead.
On a $6,000 balance at 24%, that is $120 of interest plus $60, a first minimum of $180. The interest part only pays for the month. The 1% slice is the part that actually lowers the balance.
The first minimum on $3,000, $10,000 and $30,000
With this formula at 24%, here is how the first minimum breaks down on three balances:
- $3,000 card: $60 of interest plus $30, a first minimum of $90.
- $10,000 card: $200 of interest plus $100, a first minimum of $300.
- $30,000 card: $600 of interest plus $300, a first minimum of $900.
In each case, most of the first payment is interest. Only the $30, $100 or $300 slice reduces what you owe.
The $25 floor matters only on small balances. With this formula at 24%, the first minimum is $25 on $500 and $27 on $900.
What paying only the minimum costs
This is where a small required payment gets expensive. Suppose only the minimum is paid each month and nothing new is charged. With this formula at 24%, the math says:
- $3,000: 183 months (about 15.3 years) and $4,887 of interest.
- $6,000: 252 months (about 21 years), $10,887 of interest and $16,887 in all.
- $10,000: 303 months (about 25.3 years) and $18,887 of interest.
- $30,000: 413 months (about 34.4 years), $58,887 of interest and $88,887 in all.
In every one of these examples, the interest ends up larger than the balance the card started with.
Why the minimum shrinks every month
The minimum is worked out again each month from the new, lower balance. As the balance falls, the minimum falls with it. Each payment gets a little smaller, and only about 1% of what you owe comes off each month. That slow slide is why the payoff stretches over so many years.
Picture the $6,000 card. The first minimum is $180, and every month after that the required payment comes in a little lower than the month before, while interest is still charged on everything that is left.
It helps to know what the minimum is for. It keeps the account in good standing. It is not a payoff plan.
Freeze the first minimum
One simple alternative: take the first minimum and keep paying that same amount every month, even as the required minimum drops. It works because the payment stops shrinking while the interest keeps falling with the balance, so a bigger share of each payment goes to the balance every month. With this formula at 24% and nothing new charged, the math says each of these balances clears in 56 months:
- $3,000 at a fixed $90: $1,993 of interest, $2,894 less than paying only the minimum.
- $10,000 at a fixed $300: $6,644 of interest, $12,243 less.
- $30,000 at a fixed $900: $19,933 of interest, $38,954 less.
The $6,000 example follows the same pattern. A fixed $180 takes 56 months (about 4.7 years) and $3,987 of interest, $6,900 less than minimums only. To go further, the extra payment calculator adds a fixed extra amount on top, and you can run your own numbers for any fixed payment in the credit card payoff calculator.
Your card's formula may differ
The recipe on this page is an example, not a rule every card follows. Your card may use a different percentage or a different floor, and some cards add fees to the minimum. Your card agreement states the formula your card uses.
Your statement helps too. US card statements include a minimum payment warning: how long paying only the minimum would take and what it would cost in total, worked out on your card's own formula. Because that formula can differ, those figures can differ from the examples here. If the warning and the calculator disagree, the formula is the first thing to compare.
Frequently asked questions
How do I calculate my minimum payment?
Start with the formula in your card agreement. With the common recipe used here, add that month's interest to 1% of the balance, and use $25 if the total is lower. With this formula at 24%, $6,000 gives $120 plus $60, a first minimum of $180.
What is the minimum payment on a $3,000 card?
With this formula at 24%, the first minimum is $90: $60 of interest plus $30. Paying only the minimum takes 183 months if nothing new is charged, while keeping $90 as a fixed payment takes 56 months.
What is the minimum payment on a $10,000 card?
With this formula at 24%, the first minimum is $300: $200 of interest plus $100. Minimums only take 303 months and $18,887 of interest; a fixed $300 takes 56 months and $6,644.
What is the minimum payment on a $30,000 card?
With this formula at 24%, the first minimum is $900: $600 of interest plus $300. Minimums only take 413 months and $58,887 of interest; a fixed $900 takes 56 months and $19,933.
Does paying more than the minimum cost anything?
No. Paying more than the minimum is always allowed, and the card never charges for it. The minimum is only what keeps the account in good standing.
Next step
Put your own balance and APR into the minimum payment calculator to see how long minimums take and what freezing the first one changes. With more than one card, compare the snowball and avalanche orders, or browse all the debt calculators. This page is educational, not financial advice, and its examples are illustrative approximations; see the disclaimer.