Quick reference
How minimum payments are calculated
Credit card issuers use one of two methods to calculate the minimum payment. The most common is a percentage of the outstanding balance — typically 1 to 3% — subject to a floor amount (usually 25 to 30). So if your balance is 2.000 and the minimum is 2%, the minimum payment is 40. If your balance is 800 and the minimum is 2%, the calculation gives 16 — but the floor of 25 applies, so you pay 25.
Some issuers use a fixed amount plus all interest and fees accrued during the month. In this structure, the minimum covers the full interest charge plus a small fixed amount (say 10 to 25) toward principal. This ensures the balance never grows from minimum payments alone but barely reduces it.
The percentage method creates a trap: as the balance falls, the minimum payment falls with it. A 2% minimum on a 5.000 balance is 100. On a 2.500 balance it falls to 50. On a 500 balance it drops to 25 (floor). Each month the payment falls, less goes to principal, and the debt takes longer to clear. This self-reinforcing dynamic is why credit card debt can persist for over a decade on minimums only.
In the EU, regulations require issuers to provide a clear disclosure of how long it will take to pay off the balance if only minimum payments are made, and the total cost. Check your credit card statement — this information must be shown.
Minimum payment calculation
Worked examples
Month 1: interest = 3.000 x (22%/12) = 55. Minimum = 3.000 x 2% = 60. Principal reduction: 60 - 55 = 5. New balance: 2.995. Month 2: interest on 2.995 = 54,91. Minimum = 59,90. Principal reduction: 59,90 - 54,91 = 4,99. The minimum falls with the balance, slowing repayment progressively. After 16 years and approximately 6.180 in total payments, 3.180 has gone to interest — the debt has cost more than double the original balance.
At a fixed 100 per month: month 1 interest = 55, principal = 45. Month 2 balance 2.955, interest 54,18, principal 45,82. The fixed payment accelerates repayment significantly because it does not shrink with the balance. Paid off in approximately 41 months. Total interest: approximately 1.100. The extra 40 per month above the initial minimum saves 2.080 in interest and 12,5 years of debt.
2% of 400 = 8 — below the 25 floor. Minimum payment: 25. Monthly interest: 400 x (22%/12) = 7,33. Principal paid: 25 - 7,33 = 17,67. New balance: 382,33. At this rate, the 400 balance is cleared in approximately 18 months, paying approximately 50 in total interest. The floor payment is relatively effective on small balances because it represents a much higher percentage than 2%.
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Time and cost to clear balance — minimum only vs fixed payments
| Balance | APR | Minimum only — time | Minimum only — interest | Fixed 100/month — time | Fixed 100/month — interest |
|---|---|---|---|---|---|
| 1.000 | 20% | ~8 years | ~880 | ~11 months | ~95 |
| 2.000 | 20% | ~12 years | ~1.900 | ~24 months | ~310 |
| 3.000 | 22% | ~16 years | ~3.180 | ~38 months | ~950 |
| 5.000 | 22% | ~22 years | ~5.800 | ~70 months | ~1.950 |
| 8.000 | 24% | ~30 years | ~11.200 | ~120 months | ~3.800 |
Common mistakes with minimum payments
Methodology
Minimum payment calculated as the greater of: floor amount (25) or percentage of outstanding balance (2%). Monthly interest calculated as APR divided by 12, applied to the outstanding balance. Repayment schedule simulated month by month with decreasing minimum payments. Fixed payment scenarios use a constant monthly payment regardless of balance.
Minimum payment percentages and floor amounts vary by card issuer and country. The examples use 2% minimum with a 25 floor, which is typical for European credit cards. Check your specific card agreement for the exact calculation method.
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Frequently asked questions
Formula based on standard mathematical and financial methods. Results are for informational purposes. Last reviewed May 2026. Version 1.