Paying Only the Credit Card Minimum: How Long It Takes

Most card issuers set the minimum payment as the month's interest plus about 1% of the balance, with a floor of around $25. That structure keeps the balance falling slowly, and it is why paying only the minimum can take decades.

A worked example

Take a hypothetical $5,000 balance at 22.99% APR with no new purchases:

Plan	Time to clear	Total interest
Minimum payment only	19 yr 4 mo	$8,489
Fixed $200 every month	2 yr 11 mo	$1,871

The first minimum payment is $145.79, so the fixed plan starts only about $54 a month higher. Yet it finishes more than 16 years sooner and saves $6,618 in interest.

See your own balance in the credit card payoff calculator.

Why the minimum payment shrinks

The minimum is mostly the month's interest plus a small slice of the balance. As the balance falls, the minimum falls with it, so each payment removes less principal than the last. The finish line keeps moving away.

A fixed payment breaks that pattern. Because it stays the same while the interest charge shrinks, more of every payment goes to principal each month.

Practical steps

• Choose a fixed payment you can sustain, and keep paying it as the minimum drops.
• Stop new purchases on the card while you pay it down. They add to the balance and can carry a different rate.
• If the balance is large, compare a balance transfer or a consolidation loan, including fees.

Your card statement must show how long minimum-only repayment would take. Check that disclosure against this estimate, since issuers calculate minimums in different ways.

Source: CFPB: Credit cards.