True Cost of Minimum Payments on Your Credit Card Debt

Credit cards are a convenient way to make purchases, but they can also cause you to go into debt. If you're in the process of paying off credit card debt or have already done so and want to avoid going back into it, it's important for you to understand the true cost of minimum payments on your credit card debt.

Minimum payments are often a minimum of 5% of the balance. Minimum payments are usually around 2-3% of your outstanding balance, but they can be as high as 5%.

If you pay only the minimum amount due on all your credit cards, it would take you 80 years to pay off just one card with $10,000 in debt at 20% interest (and no additional charges).

If you're carrying a credit card balance, it can be tempting to pay only the minimum payment each month. After all, if you don't make any other changes and keep making those small payments month after month, there's no reason why your debt won't eventually disappear.

But paying more than the minimum will save you money and here's why:

The average American household has over $7000 in credit card debt (that's according to If we assume that this average household pays off 5% of its balance each month with a minimum payment of 2%, then it would take them over 21 years just to reduce their balance by half! 

That means they'll have paid hundreds (if not thousands) more than necessary during that time period just because they didn't want or didn't know how much difference an extra few bucks per month would make in their overall cost of debt repayment.*

Minimum payments are often a minimum of 5% of the balance. For example, if you have $10,000 in credit card debt and are paying only the minimum due each month, it will take over 14 years and cost $12,839 in interest alone!

If you have more than one card with high interest rates and low balances (below $10k), consider consolidating all of them into one lower-interest loan or transferring them to another card with better terms. Then use whatever extra money comes out in order to pay down that new loan as quickly as possible so that you can get rid of these cards altogether once again (or at least reduce them).

  • If you have several credit cards, paying down one will help you get out of debt faster.

  • The best way to pay down your credit card debt is by paying off the card with the highest interest rate first. This will save you money in the long run and help build good credit history, which can make it easier for you to get approved for loans in the future.

  • However, if this isn't possible (perhaps because of low income), then paying off smaller balances may be better than nothing at all! It's still important not to charge anything on those cards until they're paid off completely--and don't forget that even though minimum payments aren't due until after 30 days of non-use (that's what makes them "minimum" payments), any interest accrued during those 30 days will still be added onto whatever amount remains unpaid when payment becomes due again next month!

How much should you pay? Aim for at least 10% of your bill.

The minimum payment on your credit card bill is a trap. It's designed to make you feel like you're making progress and paying down debt quickly, even though it's actually leaving you in debt for much longer than necessary.

If possible, it's best to pay off all of your bills (except utilities) with the money left over from each paycheck so that they don't accrue interest charges. However, if this isn't an option for you right now--or even if it is--there are other ways to get out of debt faster and save more money in the long run by increasing how much money goes toward paying down that balance each month.

One way is by using the debt snowball method: instead of paying off all of your debts equally, focus on paying off one first before moving onto another one until they're all gone! This method helps keep things feeling manageable as well as helping build momentum towards reaching financial freedom sooner rather than later!

It's not just about how much you're paying on your credit card each month, but how much interest you're accruing in the process.

The minimum payment is just a minimum. You can pay more than that if you want to and it will help reduce your debt faster. The real cost of minimum payments is the interest you pay on your debt--the more money that goes toward paying down principal rather than interest, the less time it takes for your balance to go down (and therefore less total interest).

Paying more than the minimum helps you get out of debt faster, but it's not just about how much you're paying on your credit card each month. It's also important to think about how much interest you're accruing in the process. 

If you have several credit cards, paying down one will help you get out of debt faster because any payments made towards that card will go toward paying down its balance first (before being applied elsewhere). You should also aim for at least 10% of your bill so that over time it becomes easier for even those with low monthly incomes to pay off their balance in full each month!