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Sometimes you can only make the minimum payment on your credit card debt, and that’s OK. Making the minimum payment is better than missing or skipping a payment which will have an adverse impact on your credit score, but it will cost you more in the long run due to mounting interest fees.
If you’re trying to determine how long it will take you to pay off your credit card just by making the minimum payments each month, use Forbes Advisor’s minimum payments calculator to find the answer.
How To Use the Credit Card Minimum Payment Calculator
You can use the calculator to determine how long it will take you to pay off your credit card balance by making only the minimum payments each month.
To get started, first enter your balance in the “Credit card balance” box. Next, enter your card’s APR (interest rate) in the “Credit card rate” box.
Finally, you can either leave the minimum payment set to the default percentage or adjust it if you know how your issuer calculates your minimum payment. If you don’t know but would like to find out, review your cardholder agreement or call the number on the back of your credit card.
Once you’ve set these inputs, you’ll see your minimum payment, how long it will take you to pay off your balance by making minimum payments and the total you’ll pay including interest. To examine other scenarios, and see what would happen if you can budget for paying 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 at the end of the billing cycle.
The exact amount of your minimum payment will vary from month-to-month and from card-to-card as each issuer has their own way of calculating the minimum payment. Typically, the minimum payment is a 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’ll pay the entire balance so that you can avoid interest charges. However, if you can’t pay in full, you should absolutely still pay the minimum payment. Making a payment on time can help you avoid late fees. Missing a payment entirely can also be a strike against you on your credit report and may lower your score, especially if it’s a habit. So, make an effort to make the minimum payment (or more). A $30 payment toward a $1,000 bill might not look like much, but it very much 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 that help keep this month’s troubles from tanking your credit.
How Is a Credit Card Minimum Payment Calculated
Different card issuers have different formulas for calculating your minimum payment but you’ll find the criteria in your card’s terms and conditions or by calling the number on the back of your card. A very common way to calculate your minimum payment is by charging a flat percentage of your total bill (often 1-3%) plus any accrued interest and fees from the prior billing cycle. There may also be a flat rate minimum, such as $35, on smaller balances.
Find the Best 0% APR Credit Cards
If you anticipate a one-time expense that will take you a while to pay off, you might be a good candidate for a credit card with 0% APR. These cards don’t charge interest for a designated period of time, which might be 12 months or more. On these cards, you can safely pay the minimum payment each month without accruing interest during the specified period, though you’ll want to pay things off before the end of the promotional period. If that sounds like a possible solution for your needs, check out the best 0% APR credit cards.
Best 0% APR & Low Interest Credit Cards Of 2024
Learn More
Frequently Asked Questions (FAQs)
Is it OK to only make minimum payments on my credit card?
Carrying debt on your credit card is expensive, and just making the minimum credit card payments each month will pile on the interest charges for every month you carry a balance. The longer you carry your debt, the more expensive it becomes, and making only the minimum payments will prolong the time it takes to pay it off.
But, making minimum payments is still better than defaulting on your debt or skipping a monthly payment altogether. Those actions can damage your credit score and make other loans both more difficult to get approved for and more expensive when you do.
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%, the rate per day would be 17/365, or 0.0466%. 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 the minimum payments won’t directly affect your credit score. But paying the minimum due on credit cards can lead to problems with your credit utilization, which is the percentage of your credit card limit that’s in use, according to your credit reports. 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 in the opposite direction.
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 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?
If you don’t make the minimum monthly payment on your credit card, the delinquency process begins. In most cases, you’ll have 30 days to make the payment without any damage to your credit report. After that, your credit card may be suspended and you won’t be able to make any new charges. If you don’t take action to pay off what you owe, your account may get sent to a third-party collection agency, which will have a negative impact on your credit report.
If you’re experiencing financial difficulties, you should call your credit card company as soon as possible before you miss the payment. Many credit card companies offer hardship programs that are based on your particular circ*mstances.
Does my credit limit reset after making the minimum payment?
After making the minimum—or any other size—payment on your credit card, you’ll have access to that much more of your available credit. For example, if you have a card with a $10,000 credit limit and you owe $9,000 you only have $1,000 left until you hit your limit. But if you make a minimum payment of $575, once the payment clears, you’ll then have access to $1,575 until you hit your limit.
Keep in mind, spending that close to the limit on your credit card means your credit utilization on the card is high and can have an adverse impact on your credit score.
