Minimum Payment Calculator

Minimum = the larger of a percentage of the balance or a floor amount (or interest plus a small percentage of principal). As the balance falls, the minimum falls too — which is what stretches payoff.

How the minimum payment is set

Your minimum payment is not a fixed figure — it is calculated each month from your balance. The most common rule is a percentage of the balance, or a small floor amount, whichever is higher: so a 3% minimum on a $6,000 balance is $180, but as the balance falls, that percentage produces a smaller and smaller number until the floor takes over near the end. Some issuers use a different rule — the interest charged plus 1% of the principal, or a flat percentage — and this calculator lets you pick the one your card uses.

Whatever the rule, the defining feature is the same: the minimum shrinks as you pay down. That sounds borrower-friendly, but it is exactly what turns a credit-card balance into a years-long, very expensive debt.

Worked example — a $6,000 balance at 24% APR, 3% minimum: This month’s minimum is $180 — but most of it is interest ($120), so only $60 touches the principal. Pay only the minimum each month and the balance takes about two decades to clear, costing well more than the $6,000 you started with.

Why minimum-only is a trap

Paying only the minimum feels responsible — you are meeting the card’s requirement — but it is the slowest, most expensive way to clear a balance. Early on, a large share of each minimum is interest, so the principal barely moves; and because the minimum then recalculates on that barely-lower balance, next month’s payment is smaller still. The payment chases the balance down, and the two converge agonisingly slowly. The calculator projects this month by month and shows the total: the years it takes, and the interest as a multiple of what you borrowed.

The fix is simple and dramatic: stop letting the payment shrink. If you keep paying today’s minimum as a fixed amount — never reducing it — the balance clears years sooner and you save a large slice of interest. The calculator shows that comparison directly. Paying more than the minimum is the single most effective move you can make.

Formula variants and continued spending

Card rules vary, and the variant matters. A “percentage or floor” rule and a “flat percentage” behave similarly — a shrinking payment that drags out payoff. The “interest + 1% of principal” rule is a little kinder: because it always covers the full interest plus a slice of principal, the balance reduces by a steady percentage and the loan is guaranteed to clear, though still slowly. Pick the variant that matches your card to see its true behaviour.

One reality to fold in: if you keep spending on the card while paying only the minimum, new purchases are added to the balance faster than the minimum pays it down — and the debt can grow rather than shrink. Enter your ongoing monthly spending to see that effect, and note the calculator’s warning if the minimum no longer even covers the interest.