Credit card minimum payments: What to know

Credit cards come with plenty of terms and conditions. But there’s one that’s especially important to know: minimum payments. Making minimum payments can help you avoid penalties and keep your account in good standing when you’re unable to pay your balance in full.

Use this guide to learn more about minimum payments, including how they’re calculated, what happens when they’re missed and how they can affect credit card interest.

Key takeaways

  • A credit card minimum payment is the smallest amount a cardholder is required to pay on their account balance each month.
  • Making on-time minimum payments is one way to avoid penalties and late fees. 
  • Minimum payments are typically calculated based on monthly balances. 
  • Consistently making only the minimum payment while carrying a balance can be the slowest way to pay off credit card debt—especially if new charges are made each month.
  • Minimum payment amounts and other account-specific information can be found on monthly billing statements and by signing into your account online.

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What is the minimum payment on a credit card?

A credit card minimum payment is the smallest amount due each monthly billing cycle. Paying the minimum on time can help you avoid penalties and fees. But keep in mind that you’ll still be charged interest when you carry a balance. Paying your full balance each month could help you avoid paying interest altogether.

How to calculate the minimum payment on a credit card

Credit card minimum payments are usually calculated based on the monthly statement balance. The minimum payment could be a percentage of the balance, plus new interest charges and late fees. Or it could be a flat percentage of the entire balance. And in some cases, the minimum payment could include past-due amounts. 

How a minimum payment is calculated can vary between credit card companies. You can find out how your minimum payment is calculated by checking your account’s terms and conditions.

How to find a credit card’s minimum payment

Information about credit card terms—including the minimum payment—can usually be found on your monthly credit card statement. Monthly billing statements are typically available online or sent through the mail.

How long to pay off a credit card making minimum payments

Making minimum payments alone can be the slowest way to pay off credit card debt—especially if you’re making new charges on your card each month. Exactly how long it takes to pay off a credit card with minimum payments depends on the balance on the account, minimum payment amounts and the card’s interest rate.  

You can check the “minimum payment warning” on your credit card statement to see how long it may take. The Credit Card Accountability Responsibility and Disclosure Act of 2009 requires credit card issuers to explain the cost of making only minimum payments. Depending on the balance, the credit card statements will provide repayment information like:

  • How many months it would take to pay a balance if only the minimum payments are made
  • The cost of making only minimum payments, based on the account’s current interest rate
  • How much to pay each month to pay off the balance in 36 months
  • The total interest charges if the balance is paid off in 36 months

Does the minimum payment on a credit card change?

Yes, it can. In fact, it’s common for the minimum amount owed to change from month to month. That’s because anything that affects your monthly statement balance could affect your minimum payment.

Here are 3 scenarios that might affect a minimum payment.

1. Making less than the minimum payment or missing a minimum payment

Paying less than the minimum amount required—or missing a payment entirely—can result in a late fee. The late fee will be added to the account balance, and the updated balance will be reflected in the next credit card statement.

Some credit card issuers might increase the annual percentage rate (APR) on a card if a minimum payment is missed. Or the issuer might calculate the future minimum payment amount using a higher percentage of the cardholder’s balance.

Keep in mind that missed payments might also impact credit scores if they’re reported to credit bureaus and end up on credit reports.

2. Paying only the minimum payment

Paying only the minimum payment may help keep your account in good standing, even if you carry a revolving balance. It also typically means you won’t have to pay late fees or penalties. 

You might be able to lower your balance if you stop using the card while continuing to make your minimum payments. That’s because a lower balance could mean less interest charged, which can lead to lower minimum payments. 

But keep in mind that this strategy will likely lead to paying more in interest over time as opposed to consistently making more than the minimum payment. 

3. Paying more than the minimum payment

According to the Consumer Financial Protection Bureau (CFPB), “Unless your financial situation leaves you no choice but to only pay the minimum, pay your entire balance each month or as much of the balance as you can, before the payment due date, to avoid or minimize interest charges.”

Even if you can’t pay your full balance each month, making more than the minimum payment can help decrease the total balance on your card. It can also help limit interest charges.

How to lower the minimum payment on a credit card

There are a few ways to help lower the minimum payment on a credit card, including:

  • Making payments that are more than the minimum amount required.
  • Making fewer purchases with the card while making on-time payments. 
  • Working to pay off credit card debt using a debt reduction strategy like the debt snowball method or the debt avalanche method.
  • Finding ways to cut back on spending by creating a budget and then putting the extra funds toward paying down the balance.
  • Using a balance transfer to switch to a credit card with a low introductory APR, which could result in a lower monthly payment. Keep in mind that balance transfers may include transfer fees, which are often a percentage of the account balance. And if there’s an outstanding balance after the promotional period ends, the payment may increase, depending on the rate.

Credit card minimum payment FAQ

Learn more about credit card minimum payments.

One way to pay more than the minimum payment is to make multiple credit card payments in one month. After making the minimum payment on time, any additional payments could help decrease the balance even faster—and help reduce the interest charged over time.

Credit bureaus like Experian®, Equifax® and TransUnion® compile credit reports based on a person’s credit history. Information in those reports is used to calculate credit scores. People have multiple credit scores that lenders may use to make decisions about offering them credit. 

According to Equifax, even one late or missed payment could impact credit scores and reports. So making on-time payments, even if they’re minimum payments, may be helpful to your credit scores.

If you’re making only minimum payments, it may take longer to lower your balance and your credit utilization ratio. And credit utilization ratio, which is the percentage of the total available credit you’re using, is an important factor in determining credit scores. In general, the lower the credit utilization ratio, the better. In fact, the CFPB recommends having a credit utilization ratio of 30% or lower to help show lenders you can use credit responsibly.

If you pay only the minimum amount due, you may be charged interest on any remaining, unpaid balance.

How to set up automatic minimum payments

Setting up automatic minimum payments can help ensure a cardholder doesn’t miss a payment due date. Keep in mind, the process for setting up minimum payments might vary depending on the card issuer. 

Capital One cardholders can set up AutoPay to make automatic monthly credit card payments. Capital One bank customers can also set up Bill Pay from their bank accounts.

Credit card minimum payments in a nutshell

When you make the minimum payment on your credit card each month, it can help you keep your account in good standing and avoid late fees. 

But routinely making only the minimum payment while carrying a balance can mean paying off credit card debt slowly—especially if you make new charges each month. While you’re working toward paying down your balance, it may help to learn more about what goes into paying off credit card debt. You can also look into options to save on interest with Capital One’s balance transfer credit cards.

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