Minimum Credit Card Payment Calculator

How this calculator works

Issuers commonly set the minimum as a simple percentage of your statement balance (e.g., 2–4%), or the greater of a percentage or a small fixed amount (e.g., 2% or £25). We simulate month-by-month using your APR, add interest, apply the minimum policy, and reduce the balance. You can include new monthly charges for the next minimum, and optionally ignore them for payoff projections to see a “what if I stop spending?” scenario.

Formulas (simplified)

• Monthly rate ≈ APR / 12.
• Monthly interest = balance × monthly rate.
• Minimum: pct × balance or max(pct × balance, floor).
• Payment first covers interest, remainder reduces principal. We cap the final payment so it never exceeds the remaining balance.

Actual issuer calculations may differ (e.g., daily interest, fees). Always check your statement.

Informational only — not financial advice.

Understanding Minimum Credit Card Payments

A credit card’s minimum payment is the smallest amount your issuer requires you to pay by the due date to keep the account in good standing. It prevents late fees and penalty actions, but it’s usually designed to be small—so most of your early payments can go toward interest rather than reducing the balance. This section explains how minimums are typically calculated, why payoff can take a long time, and practical ways to reduce interest.

How minimums are commonly set

• Percentage of balance: A flat percentage (often 2–4%) of the statement balance.
• “Greater of” rule: The greater of a small percentage or a fixed pound/dollar amount (e.g., 2% or £25).
• Interest-first effect: Each month, interest is added to your balance; your payment covers interest first, then any remainder reduces principal.

Policies vary by issuer and card. Always check your statement for the exact formula and any fees.

Why paying only the minimum can be costly

Credit card interest is typically accrued from a daily or monthly rate derived from the APR. When balances are high and minimums are low, a large share of your payment services interest. That means principal falls slowly and the repayment timeline stretches, increasing total interest over time.

• Slow principal reduction: Early payments may barely dent the balance.
• Compounding over time: Interest is repeatedly calculated on remaining balances.
• Potential “negative amortisation” risk: If new spending and fees exceed what you pay, your balance can grow rather than shrink.

Simple example

Suppose your statement balance is £1,500 at 24.9% APR (~2.075% per month). A 3% minimum is £45. The first month’s interest is about £31.13 (1,500 × 0.02075), leaving roughly £13.87 to reduce principal. You’re current on payments, but the balance only drops to ~£1,486—illustrating why payoff takes time at minimums.

Improving your payoff timeline

• Pay more than the minimum: Even a small, fixed extra amount each month can significantly cut interest and months to payoff.
• Pause new spending: Temporarily avoiding new charges helps your payments reduce principal faster.
• Consider a lower rate: Balance transfer offers or lower-APR products (if available and suitable) can reduce interest costs.
• Automate and track: Automatic payments help avoid missed due dates and late fees.

This content is informational only and not financial advice. Terms and calculations vary by card and issuer—always review your statement and card agreement.

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