Here's what happens if you only pay the minimum on your credit card (2024)

It can be tempting to just pay that small minimum amount due on your credit card bill, but doing so can end up being really expensive.

When your receive your credit card bill, there are typically three amounts you can pay: the minimum due, the statement balance and the current balance. The minimum payment is the smallest amount of money that you have to pay each month to keep your account in good standing. The statement balance is the total balance on your account for that billing cycle. The current balance is the total amount of your most recent bill plus any recent charges.

Experts recommend you pay the statement balance in full every month, but there are times when that may not be possible. In those cases, it's important to make at least the minimum payment so your account stays current and you don't incur any late fees or penalty APRs.

Below, Select reviews what happens if you only pay the minimum due and steps you can take if you're having trouble paying your statement in full.

How your minimum payment is calculated

Minimum payments are calculated differently bank by bank, but most commonly a "floor" is set, usually $25 or $35, which is the lowest minimum payment you'll be charged.

However, if your statement balance is less than the floor, your minimum payment will be the total balance. For example, if the floor is $35 but your balance is $11.95, your minimum payment will equal your statement balance — $11.95.

What happens when you only make the minimum payment

While it's important to make at least the minimum payment, it's not ideal to carry a balance from month to month, because you'll rack up interest charges (unless you're benefiting from an intro 0% APR) and risk falling into debt.

According to the Credit CARD Act of 2009, card issuers are legally required to include a "minimum payment warning" on each billing statement. This is often represented by a table that tells you the total time to pay off your balance and the total amount you'll end up paying (including interest), if you only pay the minimum. Sometimes there will be an example showing what happens if you pay more than the minimum, and the resulting lower interest charges.

Here's an example of the table shown on my last statement. For reference, my minimum payment is $25 and interest rate 15.99% variable.

Minimum Payment Warning

If you make no additional charges using this card and each month you pay... You will pay off the balance shown on this statement in about... And you will end up paying an estimated total of...
Only the minimum payment4 years$1,113
$293 years$1,056 (Savings: $57)

If I only make the minimum payment of $25 each, it will take me an estimated four years to pay off my $827.32 balance. During this time, I'd accrue about $285.68 in interest charges. By increasing my minimum payment by only $4 to $29, I'd save $57 and decrease the time to pay off my balance to roughly three years.

The consequences of paying only the minimum are costly, so pay off your balance in full each month to avoid high interest charges and debt.

Beyond a table outlining the results of paying only the minimum, some cards, such as the Apple Card, are beginning to include interactive payment tools that show you the interest charges you'll incur if you only pay the minimum.

Bottom line

While paying the full statement balance is preferred, there may be times when you can only make the minimum payment. For those situations, it can be OK to only pay the minimum — but not long term. Once you have the funds available to cover your balance, pay it off in full. At the very least, you should try to pay more than the minimum, even if you can't afford the full balance.

If you're having trouble paying your statement in full regularly, that can be a sign of a larger issue. Review your cash flow and spending habits to see if there's room to cut costs. You can also change your bill's due date to one that's more convenient for when you get paid.

Another option is to open a credit card offering an intro 0% APR on new purchases or a balance transfer credit card offering no interest for up to 21 months.

If you want a longer balance transfer intro period, consider the Citi Simplicity® Card with a 0% APR for the first 21 months on balance transfers from the date of first transfer and 0% APR for 12 months on purchases from the date of account opening (after, 19.24% - 29.99% variable APR; see rates and fees). Balance transfers must be completed within four months of account opening. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Learn more:

  • Making only minimum payments on credit card debt could cost you thousands and take over a decade to repay
  • Here's the best time to pay your credit card bill
  • Why subprime borrowers should think twice before opening a Fingerhut account

Information about the Apple Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Here's what happens if you only pay the minimum on your credit card (2024)

FAQs

Here's what happens if you only pay the minimum on your credit card? ›

Interest charges add up: Typically, credit companies will charge you high interest rates on unpaid balances. If you only pay the minimum each month, the interest charges can snowball. The additional interest and any other fees are added on to your balance and can increase a lot over time.

What happens if I just pay the minimum on my credit card? ›

If you pay the credit card minimum payment, you won't have to pay a late fee. But you'll still have to pay interest on the balance you didn't pay. And credit card interest rates run high: According to November 2023 data from the Federal Reserve, the national average credit card APR was 21.47%.

What happens if you pay only minimum due amount of credit card? ›

You will not be offered any interest-free credit period if you have paid only the Minimum Amount Due (MAD) and not the credit card outstanding in full. Rather, you will be charged an interest amount from the date of purchase. The interest amount will also keep accumulating till you settle the dues.

Do you get bad credit if you only pay the minimum? ›

Even though minimum credit card payments may sometimes seem helpful, they're almost always a mistake in the long run. Making minimum payments can snowball into a big problem—potentially hurting both your credit score and your wallet.

What happens if you don't pay full balance on a credit card? ›

Carrying a balance can lead to expensive interest charges and growing debt. Plus, using more than 30% of your credit line is likely to have a negative effect on your credit scores. Work on making it a habit to always pay off your credit card in full.

Is it bad to pay your credit card twice a month? ›

Making two payments a month helps your credit score in the sense that it will keep your credit utilization down.

What is the minimum payment on a $3,000 credit card? ›

The minimum payment on a $3,000 credit card balance is at least $30, plus any fees, interest, and past-due amounts, if applicable. If you were late making a payment for the previous billing period, the credit card company may also add a late fee on top of your standard minimum payment.

Is it OK to pay only minimum amount due? ›

A: Paying only the minimum amount due leads to prolonged debt due to accumulated interest and a higher credit utilisation ratio and can result in paying significantly more over time due to interest and fees.

What is the minimum payment on a $500 credit card? ›

Percentage method: Some credit card issuers calculate the minimum payment as a percentage of your outstanding balance. This percentage typically falls within the range of 1% to 3% but can vary. For example, if your outstanding balance is $500 and the minimum payment percentage is 2%, your minimum payment would be $10.

What happens if you only pay half of your credit card bill? ›

Unless you've reached a prior agreement with the credit card company, partial payments will not satisfy your account's minimum payment requirements. Even if you pay a little money, your account will become delinquent, and the credit card company will report the late payments to the credit bureaus.

What is the downside to paying the minimum on your credit card? ›

Why? Because when you carry a balance on your credit cards, your credit card issuer will charge interest on your debt—and when you only make the minimum payment on your credit cards, those interest charges can quickly add up.

Which is the best strategy for paying your credit card bill? ›

By paying the full statement balance each billing cycle, you'll avoid paying any interest. You should aim to pay the statement balance on your account by your due date each billing cycle.

Will my credit score go up if I pay off my credit card in full? ›

If you're close to maxing out your credit cards, your credit score could jump 10 points or more when you pay off credit card balances completely. If you haven't used most of your available credit, you might only gain a few points when you pay off credit card debt.

What is the 15-3 rule? ›

The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date. Proponents say it helps raise credit scores more quickly, but there's no real proof. Building credit takes time and effort.

When to pay a credit card bill to increase credit score? ›

To avoid paying interest and late fees, you'll need to pay your bill by the due date. But if you want to improve your credit score, the best time to make a payment is probably before your statement closing date, whenever your debt-to-credit ratio begins to climb too high.

What is the minimum payment on a $5000 credit card balance? ›

Apply the percentage to your current credit card balance and then add your fees and past-due amounts. First, you'll owe 2% on the balance of $5,000, then you'll add $120 past due and $80 in late fees. That would make your minimum payment $300.

Should I pay minimum payment on credit card or last statement balance? ›

In order to have your account reported as current to the credit bureaus (Experian, Equifax and TransUnion) and avoid late fees, you'll need to make at least the minimum payment on your account. But in order to avoid interest charges, you'll need to pay your statement balance in full.

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