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MasterMath

Minimum Payment Calculator

Paying only the 3% minimum on a 2,000 balance at 24% APR takes over eight years and costs more than 1,500 in interest. The minimum is designed to keep you paying, not to clear the debt.

Currency and number format for

Paying only the minimum

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Paying only the minimum—
First minimum payment—
Total interest—
You will pay in total—
On top of the original balance—

How this was worked out

    Indicative result. Minimum payment rules vary by card and by country. Check your own statement for the exact percentage and floor.

    The formula

    minimum = max(balance × percentage, cash floor)

    Where it comes from

    The minimum is a percentage of the balance, with a small cash floor underneath it. Because it is a percentage, it shrinks as the balance shrinks — so the debt gets smaller and so does your payment, and the finish line keeps moving away.

    How to work it out by hand

    1. Work out the minimum: the balance times the percentage, or the cash floor if that is higher
    2. Subtract that month's interest from the payment
    3. Whatever is left reduces the balance
    4. Recalculate the minimum on the new, smaller balance and repeat

    What is worth knowing

    This is the single most expensive habit in consumer finance, and the mechanism is the shrinking payment. Fix the payment at the first minimum instead of letting it fall, and the same debt clears in a fraction of the time for a fraction of the cost. Below a certain percentage the arithmetic breaks entirely: if the minimum does not cover the monthly interest, the balance grows no matter how long you pay. That is why regulators in several countries now force a minimum that guarantees the balance falls.

    Frequently asked questions

    Why does paying the minimum take so long?

    Because the minimum is a percentage of a shrinking balance, so the payment shrinks too. Most of each payment goes on interest, and the part that clears the debt gets smaller every month.

    What is the fix?

    Fix your payment at today's minimum and keep paying that same amount as the balance falls. It costs you nothing extra this month and clears the debt years earlier.

    Can the balance actually grow?

    Yes, if the minimum does not cover the monthly interest. This calculator tells you when that happens instead of returning a number.

    What percentage is typical?

    Between 1 and 5% of the balance, with a cash floor of around 20 to 25. It varies by card and country, so check your statement.