Credit cards offer convenient payment options, but understanding how your minimum payment is calculated is crucial for managing debt effectively. When you don't pay your full statement balance by the due date, your credit card issuer requires a minimum payment to keep your account in good standing. This minimum payment is typically a small percentage of your outstanding balance, plus any accrued interest and fees.
How is the Minimum Payment Calculated?
Credit card issuers use a formula to determine your minimum payment. While the exact formula can vary slightly between card issuers, a common method involves two components:
A Percentage of the Balance: This is usually between 1% and 5% of your statement balance.
Interest and Fees: The total amount of interest charged for the billing cycle, plus any late fees or other charges.
Some cards also include a fixed minimum payment amount, meaning your minimum payment will be the greater of the calculated percentage/interest amount or that fixed dollar amount (e.g., $25). Our calculator uses these common methodologies.
Why Paying Only the Minimum is Risky
Paying only the minimum payment on your credit card can lead to several negative consequences:
Extended Debt Repayment: It will take a very long time to pay off your balance if you consistently make only the minimum payment.
High Interest Costs: You'll end up paying significantly more in interest over the life of the debt, often far exceeding the original purchase price.
Damage to Credit Score: While making the minimum payment avoids late fees, carrying a high balance relative to your credit limit (high credit utilization) can negatively impact your credit score.
Using the Calculator
Our calculator helps you estimate your minimum payment based on your current balance, annual interest rate, and the minimum payment percentage set by your card issuer. You can also factor in a potential fixed minimum payment amount.
Current Balance: Enter the total amount you currently owe on your credit card.
Annual Interest Rate: Input the Annual Percentage Rate (APR) for your card.
Minimum Payment Percentage: Enter the percentage your card issuer uses for its minimum payment calculation.
Fixed Minimum Payment (Optional): If your card has a fixed minimum (e.g., $25 or $35), enter it here. The calculator will use the higher of the calculated amount or this fixed amount.
The calculator will then provide an estimated minimum payment amount. Remember, this is an estimate, and your actual minimum payment may vary slightly based on your card issuer's specific terms and conditions.
Recommendation
While this calculator helps determine the minimum, it's always best practice to pay more than the minimum whenever possible. Paying off your balance in full each month is the most financially sound strategy to avoid interest charges altogether.
function calculateMinimumPayment() {
var balance = parseFloat(document.getElementById("balance").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var minPaymentPercent = parseFloat(document.getElementById("minPaymentPercent").value);
var fixedAmount = parseFloat(document.getElementById("fixedAmount").value);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var resultMessagePara = document.getElementById("result-message");
if (isNaN(balance) || isNaN(annualRate) || isNaN(minPaymentPercent)) {
resultMessagePara.textContent = "Please enter valid numbers for Balance, Annual Rate, and Minimum Payment Percentage.";
resultValueDiv.textContent = "";
resultDiv.style.display = "block";
return;
}
var monthlyRate = annualRate / 100 / 12;
var interestOnBalance = balance * monthlyRate;
// Calculate percentage of balance
var percentOfBalance = balance * (minPaymentPercent / 100);
// Determine the calculated minimum payment
var calculatedMinPayment = percentOfBalance + interestOnBalance;
// Handle optional fixed minimum payment
var finalMinPayment;
if (!isNaN(fixedAmount) && fixedAmount > 0) {
finalMinPayment = Math.max(calculatedMinPayment, fixedAmount);
resultMessagePara.textContent = `Minimum payment is the greater of ${minPaymentPercent}% of balance + interest ($${calculatedMinPayment.toFixed(2)}) or the fixed amount ($${fixedAmount.toFixed(2)}).`;
} else {
finalMinPayment = calculatedMinPayment;
resultMessagePara.textContent = `Minimum payment is ${minPaymentPercent}% of balance ($${percentOfBalance.toFixed(2)}) plus interest ($${interestOnBalance.toFixed(2)}).`;
}
// Ensure minimum payment is not less than a minimal amount if balance exists
if (balance > 0 && finalMinPayment < 1.00) {
finalMinPayment = 1.00;
resultMessagePara.textContent += " (Ensured minimum of $1.00)";
} else if (balance === 0) {
finalMinPayment = 0;
resultMessagePara.textContent = "Your balance is $0.00, so no minimum payment is due.";
}
resultValueDiv.textContent = "$" + finalMinPayment.toFixed(2);
resultDiv.style.display = "block";
}