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Some months it can seem like making the minimum payment on your credit card debt is your only option, and that’s OK. Covering the minimum amount due is better than paying late or skipping a payment, which can significantly damage your credit score.
Mounting interest fees, however, make opting for minimum payments much more expensive over time than paying your balance in full each month. And, it can keep you in debt significantly longer. Use Forbes Advisor’s minimum payment calculator to estimate how long it will take to pay off your credit card with only minimum payments—and how much it will cost you.
How To Use the Credit Card Minimum Payment Calculator
Gather key information, like your balance and the card’s APR, and follow these steps:
- Enter your balance in the “Credit card balance” field.
- Enter your card’s APR (interest rate) in the “Annual Interest Rate for your credit card” field.
- Leave the “Minimum Payment Criterion” field set to the default, or adjust if you know how your issuer calculates the minimum payment. (If you’re unsure, check your cardholder agreement or call the number on the back of your card to find out.)
- Select “Minimum Payment” in the field labeled “Select a payment schedule based on.”
- Click “Calculate” to see the results.
Below the form fields, you’ll see your minimum payment, how long it will take to pay off your balance by making minimum payments and the total you’ll pay including interest. Expand the “Show Minimum Payment Schedule” option to see a breakdown of your balance, interest, principal, payments and remaining balance.
To see what would happen if you paid more than the minimum due each month, take a look at our credit card payoff calculator.
What Is the Minimum Payment on a Credit Card?
A minimum payment on a credit card is the lowest amount you can pay toward your balance and still be considered in good standing with the issuer. If you have a balance on your credit card, the minimum payment is due every month by the end of the billing cycle.
The exact minimum payment amount will vary by issuer and card. However, it will often be a set percentage of the amount you owe for that billing cycle, plus any additional fees incurred during the statement period.
Know that if you’re feeling overwhelmed by the amount you owe on your credit card, Forbes Advisor’s guide to debt relief has strategies and advice that can help.
Should I Pay the Minimum Payment on a Credit Card?
Paying the minimum on a credit card should always be exactly that—the minimum. In a perfect world, you’d pay the entire balance to avoid interest charges. However, if you can’t pay in full, you should absolutely pay the minimum amount due. Late payments, along with missing a payment entirely, can be reflected on your credit report and lower your score, not to mention incur fees. So, make at least the minimum payment each month. A $30 payment toward a $1,000 bill might not look like much, but every dollar matters.
Pro Tip
If your finances are strained and you don’t expect to be able to make the minimum payment, call your card issuer in advance. They may be able to make one-time exceptions to keep this month’s troubles from tanking your credit.
How Do I Calculate the Minimum Payment on a Credit Card?
Each card issuer uses a different formula to calculate the minimum payment. It’s often outlined in the card member agreement, or you can call the number on the back of your card to find out. The minimum payment calculation may include adding the following together:
- Any amount that is past due
- A flat rate, like $40
- 1% to 3% of the new balance
- Interest charges or late fees from previous statements
Find the Best 0% APR Credit Cards
If you anticipate a one-time expense that will take a while to pay off, you may want to consider applying for a 0% APR card. These cards don’t charge interest for a designated period, which can be anywhere from six months to nearly two years. With these cards, you can safely pay the minimum payment each month without accruing interest during the specified period.
To avoid interest accrual altogether, you’ll want to pay the total balance off before the end of the promotional period. If that sounds like a possible solution to your needs, check out the best 0% APR credit cards.
Frequently Asked Questions (FAQs)
Is it OK to only make minimum payments on my credit card?
Credit card APRs tend to run high, so making just the minimum payment each month can pile on the interest charges until the balance is paid off. The longer you carry your debt, the more expensive it becomes, and making only minimum payments prolongs the time it takes to pay it off.
But, making minimum payments is better than paying late or skipping a monthly payment altogether. Those actions can damage your credit and make other loans both more difficult to be approved for and more expensive when you are approved.
How is the interest calculated on my credit card?
Most credit cards calculate your interest charges using an average daily balance method, which means your interest is compounded and accumulates every day, based on a daily rate. In other words, every day your finance charges are based on the balance from the day before.
The daily rate is determined by dividing your credit card’s APR by 365 to find the rate per day. So for a credit card with an APR of 17.00%, the rate per day would be 17/365, or 0.047%. That daily rate interest is then multiplied by your balance that day. Since the average daily balance is compounded, each day the calculation is based on the day before.
What happens to your balance and credit score when you pay only the minimum on your credit card?
Making minimum payments avoids negative marks being added to your credit reports. But only paying the minimum due can lead to higher credit utilization (the percentage of your credit card limit that’s in use). Your overall balance will increase as the interest charges accrue on your card each month, which in turn will cause your utilization rate to rise. And an increase in credit utilization can move your credit score down.
Why does my credit card say ‘no minimum payment due’?
If your credit card statement or online account says “no minimum payment due” that means you’ve already made a payment in that billing cycle for at least the minimum required amount. If you still have a balance on your card, you’re welcome to pay it off in full or in any other amount after meeting the minimum required amount.
What happens if I miss or skip a monthly payment?
In most cases, you’ll have 30 days to make the payment without any damage to your credit report. But the delinquency process will likely begin after that period. Note that many credit card companies offer hardship programs. So if you’re experiencing financial difficulties, you should call your credit card company as soon as possible before missing a payment.
Does my credit limit reset after making the minimum payment?
After making the minimum—or any size—payment on your credit card, you’ll have access to that much more of your available credit. So if you make a $100 minimum payment, you’ll gain $100 more spending power from your credit line.