Minimum Payment Calculator

Making minimum payments feels manageable — $25 here, $50 there. But the math behind minimum payments is designed to keep you in debt as long as possible. A $5,000 credit card balance at 22% APR with minimum payments can take over 20 years to pay off and cost you more than $8,000 in interest alone.

This calculator shows you exactly what minimum payments really cost in time and money.

How to Use This Calculator

1. Enter your balance — The current amount you owe.
2. Enter your APR — The annual interest rate on the account. This is on your statement or in your card’s app.
3. Choose your payment type:
   • Fixed amount — A set dollar amount each month (e.g., $100/month). This is more common with personal loans and some credit cards.
   • Percentage of balance — Most credit cards set minimums at 1-3% of your balance (with a floor of $25). As your balance drops, your payment shrinks too — which is exactly why it takes so long.

The calculator will show your payoff timeline, total interest, total amount paid, and a “true cost multiple” that tells you how many times over you’ll pay for what you originally borrowed.

Why Minimum Payments Take So Long

When you make the minimum payment on a credit card, most of that payment goes toward interest — not your actual balance. On a $5,000 balance at 22% APR, the first month’s interest alone is about $92. If your minimum payment is 2% of the balance ($100), only $8 goes toward reducing what you owe.

And it gets worse with percentage-based minimums. As your balance slowly drops, your minimum payment drops with it. A $5,000 balance might start with a $100 minimum, but by the time you’re down to $2,000, your minimum is only $40 — and most of that is still interest. The lower payments stretch the payoff timeline from years into decades.

The Math Behind the Trap

Here’s a simplified look at how a $5,000 balance at 22% APR plays out with 2% minimum payments:

Year	Approximate Balance	Monthly Payment	Going to Interest
Year 1	$4,700	~$95	~$85
Year 5	$3,600	~$72	~$66
Year 10	$2,400	~$48	~$44
Year 15	$1,300	~$26	~$24
Year 20+	~$200	$25 (floor)	~$4

Notice how in year 10 you’ve been paying for a decade and still owe almost half. That’s the minimum payment trap.

How to Escape Minimum Payments

The single best thing you can do is pay more than the minimum — even a little more makes a dramatic difference.

• Adding $50/month to a $5,000 balance at 22% APR cuts payoff time from 20+ years to about 5 years and saves roughly $5,000 in interest.
• Doubling your minimum can cut the payoff time by more than half.
• Using the debt avalanche or snowball method helps you systematically eliminate debts and redirect freed-up payments to remaining balances.

Run your numbers through this calculator first to see your baseline, then try our extra payment calculator to see how adding even a small amount changes everything.

FAQ

What’s a typical minimum payment?

Most credit cards set the minimum at 1-3% of your outstanding balance, with a floor of $25. Some cards use a flat dollar amount instead. Check your card agreement or latest statement to find your specific formula.

Why do credit card companies set minimums so low?

Because they profit from interest. The longer you carry a balance, the more interest they earn. Low minimums ensure you stay in debt longer while still making payments they can count on. It’s not predatory in a legal sense, but it’s designed to maximize their revenue.

Is it ever okay to pay just the minimum?

In a genuine financial emergency — job loss, medical crisis — paying the minimum keeps your account in good standing and protects your credit score. That matters. But it should be temporary. As soon as you can, start paying more. Even $20 extra makes a difference.

Does this calculator work for loans too?

Yes. While it’s designed with credit cards in mind, the math works for any fixed-rate debt. For loans with fixed monthly payments (like personal loans or auto loans), use the “Fixed Amount” option with your required monthly payment.