Why the minimum keeps you in debt
Card minimums are usually calculated as the month's interest plus a small slice of the balance, often 1%, with a dollar floor. As the balance falls, the minimum falls with it, so you pay off less principal each month. That is why minimum payments can stretch a modest balance over many years. In the US, the CARD Act requires statements to show how long payoff will take at the minimum and what it will cost.
On a $5,000 balance at 22%, the first minimum here is about $142. Paying only the minimum keeps shrinking that payment and takes far longer than keeping the payment fixed at $142. The difference in interest is often thousands of dollars.
The simplest fix
Decide on a fixed payment and keep paying it even as the required minimum drops. Setting up an automatic payment for a fixed amount, rather than "minimum due", does this without any willpower. If you can add even $25 to $50 more, the timeline shortens again.
Why your card's formula matters
Issuers use different formulas, and the difference is large. On $5,000 at 22% APR, a minimum of 1% of the balance plus interest with a $35 floor takes about 16 years and 5 months and costs about $7,670 in interest. A formula of 2% plus interest clears the same balance in 10 years with about $4,090 of interest, while a 1% formula with a lower $25 floor stretches it to more than 19 years and about $8,100.
Your cardholder agreement or the back of your statement explains your issuer's formula, and the calculator lets you set the percentage and floor to match it.
Common questions
How long to pay off $5,000 paying the minimum?
With a 1%-plus-interest minimum at 22% APR, typically well over a decade, depending on the floor.
Does paying the minimum hurt my credit?
It keeps the account in good standing, but a high balance relative to your limit can lower your score.
How is the minimum payment calculated?
Often interest plus 1% of the balance, or a flat percentage like 2% to 3%, with a minimum dollar amount.
This calculator gives estimates for planning. Real returns, rates and prices change, so treat the result as a guide rather than a promise. Read how we build and check our calculators.