Glossary
Minimum Payment
The smallest payment a credit card issuer accepts each month — designed to keep the account current, not to pay off the debt.
The minimum payment is the smallest amount a credit card issuer will accept each month without penalty — and it’s calibrated to keep your account current, not to get you out of debt. Typical formulas: a percentage of the balance (1–2%), or interest plus 1% of principal, with a dollar floor around $25–35.
The design has a consequence worth staring at: because the minimum shrinks as the balance falls, principal reduction decelerates continuously, stretching payoff across decades. And in the extreme case — a 2%-of-balance minimum against an APR above about 24% — the minimum doesn’t even cover the month’s interest, and the balance grows despite on-time payments. US card statements are legally required to disclose the long-run cost of minimum-only paying for exactly this reason.
The escape is almost embarrassingly simple: fix your payment at today’s minimum and never let it fall. As the required minimum declines beneath your fixed amount, the difference attacks principal at an accelerating rate — a payoff plan that costs zero additional budget. Quantify your own version, including the minimum-only comparison, in the credit card payoff calculator, or coordinate several balances with the debt snowball calculator.
Related calculators
- Credit Card Payoff CalculatorSee when your credit card will be paid off with a fixed payment — and what minimum payments would really cost you in years and interest.
- Debt Snowball CalculatorCompare the debt snowball and avalanche methods with your real balances. See your debt-free date, payoff order, and total interest for each strategy.