Credit Card Minimum Payment Calculator

Understanding Credit Card Minimum Payments

A credit card minimum payment is the lowest dollar amount you are required to pay each month to keep your account in good standing, avoid late fees, and protect your credit score. While paying the minimum prevents immediate penalties, relying on minimum payments is one of the most expensive ways to carry debt due to compound interest.

How Credit Card Minimum Payments Are Calculated

Credit card issuers typically determine your minimum monthly payment using one of two standard formulas:

• Percentage of Statement Balance: The card issuer charges a fixed percentage of your balance, typically between 1% and 3% (with 2% being common across major credit card providers).
• Interest Plus Percentage of Principal: The minimum payment equals monthly interest accrued plus 1% of the total principal balance.

Additionally, issuers enforce a minimum payment floor (often $25 or $35). If your calculated minimum payment falls below this floor, your required payment defaults to the floor amount or your full balance if it is less than the floor.

The Minimum Payment Trap

When you pay only the minimum, the majority of your payment covers interest charges rather than reducing principal. As your balance slowly decreases, your minimum payment decreases as well, extending the payoff timeline over decades and dramatically increasing total interest paid.

To see how much faster you can eliminate card balances by paying fixed fixed amounts, use our Credit Card Payoff Calculator or evaluate interest costs with the Credit Card Interest Calculator.