Minimum Payment Calculator

The minimum payment exists to protect the lender, not to clear your debt. Most cards set it at one to two per cent of the balance, with a small floor, and they recalculate it every month as the balance falls. The result is that your payment shrinks along with the debt, so you approach zero ever more slowly. At high interest rates, a minimum-payment plan can run for decades. The reason is arithmetic. If the minimum is two per cent and the monthly interest is two per cent, almost your entire payment is eaten by interest and only a sliver touches principal. As the balance drops, the minimum drops with it, so the sliver gets thinner still. Paying the minimum is like walking up a down escalator at the same speed. Breaking the habit is simple but not easy: fix a payment amount and ignore whatever the statement suggests. Any payment above the minimum lands on principal in full, which permanently reduces future interest. Moving a regular payment from the minimum to a steady, larger figure often cuts years — sometimes more than a decade — off the payoff time. This calculator shows what a minimum-payment strategy really costs over its life. It assumes a fixed rate, no new spending and the standard percentage-plus-floor formula; some issuers use a flat minimum instead. Treat the output as an illustration and always read how your own issuer calculates the minimum, which is stated on the agreement.

This calculator returns estimates for general information only. It is not financial, investment, tax or legal advice, and it cannot replace guidance from a qualified professional who knows your circumstances. Figures such as loan payments, investment growth and retirement projections are simplified models based on the inputs and assumptions you provide, not guarantees of future results.