The minimum payment on your credit card statement is one of the most misleading numbers in personal finance. It appears to be a reasonable, manageable obligation — but it's designed to maximize the interest you pay over time while keeping you technically current on your account.
This calculator shows you the true cost of minimum-only payments on your specific balance, and the dramatic difference that even modest additional payments can make.
How to Use This Calculator
Enter your current balance, your card's APR, and your current minimum payment structure. The calculator will show you:
- Your payoff timeline on minimum payments only
- Total interest you'll pay on minimum payments only
- Your payoff timeline at various fixed payment amounts
- Total interest at each payment level
- The break-even point where paying more saves you money
Minimum Payment Calculation
Monthly Interest = Balance × (APR ÷ 12)Where:
Balance=Your current outstanding balanceAPR=Your card's Annual Percentage RateMonthly Interest=Interest accrued in one monthExample
$5,000 at 21% APR: $5,000 × (0.21 ÷ 12) = $87.50/month in interest
The Scenarios: Minimum vs. Fixed Payments
The following table shows the payoff timeline and total interest for a $5,000 balance at 21% APR under different payment strategies:
Payoff Scenarios: $5,000 at 21% APR
| Monthly Payment | Payoff Time | Total Interest | Interest Saved vs. Minimum |
|---|---|---|---|
| Minimum only (~2%) | ~11 years | ~$4,200 | — |
| $150/month | ~4 years 2 months | ~$2,400 | ~$1,800 |
| $200/month | ~2 years 8 months | ~$1,500 | ~$2,700 |
| $300/month | ~1 year 10 months | ~$980 | ~$3,220 |
| $500/month | ~1 year 1 month | ~$560 | ~$3,640 |
Estimates based on minimum payment of 2% of balance or $25, whichever is greater. Actual amounts vary by card terms.
The Compounding Acceleration Effect
The dramatic difference between minimum payments and fixed payments comes from the compounding acceleration effect. When you pay only the minimum, the minimum decreases as the balance decreases — meaning you pay less and less each month, extending the payoff timeline dramatically.
When you pay a fixed amount above the minimum, you're applying more to principal each month, which reduces the balance faster, which reduces the interest charge faster, which allows more of your payment to go to principal — a virtuous cycle that accelerates payoff.
Tip
The Fixed Payment Rule
Instead of paying the minimum, choose a fixed monthly payment that you can sustain and set up autopay for that amount. Even $50 above the minimum makes a significant difference. The key is consistency — a fixed payment that you maintain every month, regardless of what the minimum is.