Minimum Payment Calculator (The Minimum Payment Trap)
Paying only the minimum feels manageable because the payment shrinks as you go — that is the trap. See the years it takes and the interest it costs, beside one fixed-payment alternative.
A payment designed to shrink as slowly as you do
Card minimums are typically interest plus 1% of the balance, or a small percentage of the balance — formulas whose defining feature is that the payment falls as the balance falls, stretching the debt across years while interest compounds the issuer's patience into profit. This page prices that design on your balance.
Monthly interest = balance × APR ÷ 12 · minimum = interest + 1% of balance (or your issuer's flat %)
Example: $5,000 at 24% on interest + 1%: the first minimum is about $150, the debt takes well over 9 years to die, and the interest totals roughly $3,400 — 68% of the original balance, paid for the privilege of paying slowly. The result panel contrasts one fixed payment's figures on the same debt.
The fix is boring and total
Fix the payment at today's minimum (or any round figure above it) and never let it shrink: the debt dies years earlier for the same initial monthly outlay. That single change — from a percentage-of-balance payment to a fixed one — is worth more than most balance-transfer offers.
How this is calculated
Monthly simulation: interest accrues at APR ÷ 12 (the page labels this monthly model; issuers' daily-average model varies the totals slightly). Two issuer formulas are offered — interest + 1% of balance, and a flat percentage of balance with a $25 floor, reflecting common cardholder agreements. The contrast figure runs the published daily-balance model at a fixed payment from the payoff calculator, so the two models are each identified where used.
Frequently asked questions
Why do issuers set minimums this way?
Regulators pushed issuers (post-2003 guidance in the US) to formulas that at least amortize — interest plus some principal — replacing older minimums that allowed negative amortization. The current formulas comply while still maximizing the debt's profitable lifespan.
Is paying the minimum bad for my credit?
Not directly — it is 'paid as agreed.' The damage is indirect: utilization stays high for years, which the utilization lever punishes continuously. Your score and your wallet are both better served by fixed payments.
What if the minimum is all I can afford right now?
Then it is a bridge, not a plan: hold it while income or expenses change, protect the payment record, and revisit the moment anything loosens. A hardship conversation with the issuer is worth more than silent minimums if the situation is structural.
Does the trap apply to other debts?
Anywhere the payment is defined as a shrinking percentage of the balance. Installment loans escape it by construction (fixed payments); revolving credit is where the trap lives.
Embed this calculator
Writing about money — a blog, a school page, a community site? Put this calculator on your page, free: copy the code below and paste it where you want the calculator to appear. It stays up to date automatically — the small credit line underneath is all we ask in return.
CalcPrincipal