Glossary term
Minimum Payment
The minimum payment is the smallest amount a credit card issuer or lender requires each billing cycle to keep the account in good standing. On cards it is often a small percentage of the balance plus interest, so paying only the minimum keeps you current but can stretch repayment over many years and multiply interest.
Updated October 17, 2026 · Editorial Team
How Minimum Payment works in practice
Card issuers set their own minimum formula, commonly something like 1% of the balance plus that month's interest and fees, with a dollar floor such as $25. Because the minimum is tied to the balance, it shrinks as you pay down the debt, which is exactly why the payoff takes so long. Federal rules require statements to show how long minimum-only repayment would take.
Assume a $5,000 balance at 22% APR, monthly interest, a minimum of 1% of the balance plus interest with a $25 floor, and no new charges. The first minimum is $141.67. Paying only the minimum takes 230 months, about 19 years, and costs $8,099.75 in interest. A fixed $200 a month clears the same balance in 34 months with $1,749.90 of interest.
Paying the minimum protects your credit history from late payments, so it is the floor, not the plan. Locking in a fixed payment, even one a little above the first minimum, cuts the payoff time dramatically. The minimum payment warning box on your statement is a quick way to see your own numbers.
Minimum Payment: quick questions
How is a credit card minimum payment calculated?
Each issuer sets its own formula, often a percentage of the balance plus interest and fees, with a dollar floor. Your cardholder agreement spells it out.
Does paying the minimum hurt my credit?
No, paying at least the minimum on time counts as on time. A high balance can still raise your credit utilization, though.
Why does my minimum payment go down over time?
Because it is based on the balance. As the balance falls, so does the minimum, which slows the payoff if you pay only that.
Sources
- Credit cards — Consumer Financial Protection Bureau. Accessed October 17, 2026.
- Regulation Z (Truth in Lending), 12 CFR Part 1026 — Consumer Financial Protection Bureau. Accessed October 17, 2026.
We cite primary sources: regulators, central-bank data and federal agencies. Worked examples on this page are our own calculations. See our methodology.
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