Minimum Payment Calculator
Calculate the minimum monthly payment required on a credit card balance based on your APR and card issuer's payment percentage rule. Use this to understand your baseline obligation and the true cost of paying only the minimum.
About this calculator
Credit card issuers typically set minimum payments as the greater of two amounts: a flat percentage of the outstanding balance, or the sum of one month's interest plus 1% of the principal. The formula used here is: minPayment = MAX(balance × (paymentPercentage / 100), balance × (APR / 100 / 12) + balance × 0.01). The first term represents the issuer's percentage floor (commonly 1–3%). The second term represents interest for the month plus 1% principal repayment, ensuring at least some principal is retired each cycle. Paying only the minimum dramatically extends repayment time and multiplies total interest paid. For a $5,000 balance at 20% APR, paying only the minimum can take over 20 years to fully repay.
How to use
Say your credit card balance is $3,000, APR is 20%, and your issuer's minimum payment percentage is 2%. Calculate each option: Option 1 (percentage rule): $3,000 × (2 / 100) = $60.00. Option 2 (interest + 1% principal): monthly interest = $3,000 × (20 / 100 / 12) = $50.00; 1% principal = $3,000 × 0.01 = $30.00; total = $80.00. Apply the MAX function: MAX($60, $80) = $80.00. Your minimum payment due is $80. Note that only $30 of that reduces your principal, so progress is very slow at this payment level.
Frequently asked questions
What happens if I only pay the minimum payment on my credit card every month?
Paying only the minimum keeps you in good standing with the lender, but it maximizes the total interest you pay over the life of the balance. Because most of each minimum payment covers interest rather than principal, balances shrink very slowly. A $5,000 balance at 20% APR with a 2% minimum payment could take more than 20 years to pay off and cost thousands of dollars in interest beyond the original balance. Credit card issuers are required in the US to disclose on each statement how long payoff takes when making only minimum payments, precisely because of how costly the practice is.
How do credit card companies calculate the minimum payment percentage?
Most issuers use one of two methods or whichever produces the larger amount. The first method is a flat percentage of the ending balance, typically between 1% and 3%. The second method adds the monthly interest charge to a small slice of principal—often 1% of the balance. Regulations in many countries require that minimum payments at least cover all fees and interest so the balance does not grow when a minimum payment is made. Some issuers also set an absolute floor, such as $25 or $35, meaning if the calculated percentage is lower than that floor, you still owe the flat minimum.
Why does paying more than the minimum payment save so much money on credit card debt?
Every dollar above the minimum payment goes directly toward reducing principal, which shrinks the base on which future interest is calculated. Because credit card interest compounds monthly on the outstanding balance, reducing the principal faster has a compounding benefit in reverse—each subsequent month's interest charge is calculated on a smaller number. Even adding $50 or $100 above the minimum each month can cut years off the repayment timeline and save hundreds or thousands in interest. This is why financial advisors consistently recommend paying as much above the minimum as your budget allows.