What happens if I only pay the minimum on my card?
Paying only the minimum on $5,000 takes 18 years, 11 months and adds $8,890 in interest. Keeping the first month's $151 payment steady instead: 4 years, 8 months and $3,344.
Example: $5,000 at 24% APR. Minimum: interest + 1%, at least $27.
Use your own numbersWhat should I check before paying only the minimum?
The minimum payment (definition, opens in a new tab) is set so the account stays in good standing, not so the balance gets paid off quickly. Most of it can go to interest (definition, opens in a new tab), and it shrinks as the balance does, which stretches the payoff out for years. Three things on the statement show what that means for this balance.
What does the statement's minimum payment warning say?
Card statements include a box showing how long minimum payments would take and what they'd cost in total, plus the monthly payment that clears the balance in 3 years.
Which APR is this balance charged?
APR (definition, opens in a new tab) (annual percentage rate) is the yearly rate the card quotes. A card can have different APRs for purchases, cash advances (definition, opens in a new tab) and late payments. The statement lists each one.
Why does the minimum keep getting smaller?
It's figured from the balance, so as the balance falls, the payment falls too. Less goes toward the balance each month, and the payoff slows down.
Quick guess
Paying only the minimum on $5,000 at24% APR, how long until it's paid off?
Using the numbers in the calculator below.
What does paying only the minimum really cost?
Enter the balance, the APR and the minimum formula from the statement. You'll see how long minimum payments take to reach zero and how much interest they add. Next to it is the same balance with one fixed payment every month, so the difference shows up in months and dollars.
Minimum only
—
to pay off
- Interest
- $0
- Total paid
- $0
$151 every month
—
to pay off
- Interest
- $0
- Total paid
- $0
See the year-by-year table
| After | Owed, minimum only | Owed, fixed payment |
|---|
Show the math
- The card charges APR ÷ 365 each day, compounded. Over a month that's a rate of (1 + APR ÷ 365)365/12 − 1, applied to what's owed.
- Minimum only: each month's payment is that month's interest plus the percent of the balance above, but at least the floor (or the whole balance, if less is owed). Because it's figured from the balance, it shrinks as the balance does.
- Fixed payment: the same amount every month until the last, smaller payment.
- 3-year payment: balance × rate ÷ (1 − (1 + rate)−36), the standard formula for paying off a balance with equal payments.
- No new purchases, no fees, and the APR stays the same. Real statements round to the cent and use the actual days in each billing cycle, so they'll differ a little.
What does the minimum cost after 1 year and 5 years?
Card interest is charged on the balance every day, so a slow payoff means interest on interest. That's debt compounding against you. After a year the two approaches look close. By year five, minimum payments have cost more in interest and still leave much of the balance owed.
After 1 year
| Approach | Interest paid | Still owed |
|---|---|---|
| Minimum only | ||
| Fixed payment |
After 5 years
| Approach | Interest paid | Still owed |
|---|---|---|
| Minimum only | ||
| Fixed payment |
Card interest is the third bucket: money that compounds against you.
What can I say to my card company instead?
Card companies can change more than the payment date. A short phone call can ask for a lower APR, a hardship program, or a fixed autopay amount. Below are things to ask and why each one helps. Every ask is about lowering the rate or keeping the payment from shrinking.
Before you call: have the latest statement handy. It shows the APR, the minimum payment warning and the 3-year payment.
You can ask
“I'm working on paying this balance down. Can you lower my APR?”
Every point off the APR lowers the interest charged each day. Card companies sometimes agree, especially for customers who pay on time.
You can ask
“Can I set autopay to a fixed $___ a month instead of the minimum?”
A fixed amount doesn't shrink as the balance falls, which is the difference between the two columns in the calculator above.
You can ask
“What would my payment be to pay this off in 3 years?”
The statement shows this number too. It's a concrete target instead of a payment that keeps getting smaller.
You can ask
“My income dropped. Do you have a hardship program?”
Some card companies offer a lower rate or payment for a set time. They usually have to be asked.
You can ask
“If I move this balance to another card, what's the fee, and what's the rate after the promotion ends?”
A 0% offer can help, but a transfer fee and the rate afterward decide what it really costs.
If it feels like too much to sort out alone: a nonprofit credit counselor can look at every debt together, often for free. TheNational Foundation for Credit Counseling (opens in a new tab) can connect you with one.
Sources
- Consumer Financial Protection Bureau,Credit cards: how card interest, minimum payments and statements work.
- Minimum payment formula (interest plus 1% of the balance, at least $27):Capital One, Credit Card Agreement for Cabela’s Cards (Oct 1, 2017), in the CFPB credit card agreement database. Other cards use different floors.
Educational only, not financial advice. The numbers are illustrations based on what you enter. Your card's formula, billing cycle and fees decide the real numbers, and they're on your statement.