Credit Card Minimum Payment: Everything You Need to Know
Credit Card Minimum Payments
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A credit card minimum payment can be a lifeline when you’re dealing with a financial emergency and need to free up every dollar that you can. But paying the smallest amount you can get away with is never a good long-term strategy, no matter how tight your budget feels.
If you regularly pay just the minimum amount due, you’ll inevitably grow a credit card balance so large it could stick with you for years — and possibly even decades.
In fact — unless you’re in a dire financial situation — it’s usually a terrible, horrible, no good, very bad idea to only pay the absolute minimum your lender expects. If you think we’re exaggerating, just take a look at the minimum payment warning printed on your statement. You can even end up paying way more in interest than you borrowed.
With that said, it’s still worth your time to familiarize yourself with your credit card’s minimum payment policy — just in case you need to temporarily free up cash.
How much is the minimum payment on a credit card?
In general, you can expect your minimum payment amount to shift with the size of your balance. The more you owe, the bigger your likely payment.
If your balance is small, you may get away with paying as little as $20 to $40 (or even less if your balance is really tiny). But if you owe several thousand dollars, you could be asked to pay a hundred dollars a month or more just to keep your account current — especially if you also have a high APR.
Not all lenders use the same formula for calculating a minimum payment either, so don’t expect the minimum payment on one card to match the minimum amount due on a card from a different issuer. If you carry $1,000 balances on two separate cards, for example, one lender might expect a $25 minimum payment, while another charges you $40.
Here are the minimum payments for some of the largest card issuers:
Issuer | Minimum payment formula | Your minimum payment will be at least ... |
---|---|---|
American Express | Whichever amount is higher:
| $40 (or the full amount you owe if your balance is less than $40) |
Bank of America | Whichever amount is higher:
| $35 (or the full amount you owe if your balance is less than $35) |
Barclaycard | Whichever amount is higher:
| $25 to $29 (or the full amount you owe if your balance is less than $25 to $29) |
Capital One | Whichever amount is higher
| May be $25 to $27 (or the full amount you owe if your balance is less than $25 to $27) |
Chase | Whichever amount is higher:
| $35 (or the full amount you owe if your balance is less than $35) |
Citibank | Whichever amount is higher:
| $35 (or the full amount you owe if your balance is less than $35) |
Discover | Whichever amount is higher:
Note: The formula varies, depending on the type of card you hold. For example, secured cardholders and borrowers with new or fair credit (known in lender-speak as near prime) can expect to pay at least 3% of their balance if that amount is higher than the card’s minimum fee. Prime cardholders can expect to pay at least 2%. | $15 to $35 |
U.S. Bank | Whichever amount is higher:
| $30 |
Wells Fargo | Whichever amount is higher:
| $25 |
Unless otherwise noted, the minimum payment will also include any past due amounts, fees and penalties, if applicable.
How is minimum payment calculated?
Your credit card’s exact formula will depend on your lender: Some keep their minimum payment formulas simple, while others make them more complicated.
Depending on the lender, your minimum payment amount may also reflect your credit score. For example, some lenders add a higher minimum payment on cards designed for borrowers with lower scores.
Typically, though, your lender will base your minimum payment amount on a predetermined percentage of your balance (typically around 1% to 3%) or a flat minimum fee.
Here’s how it works in practice:
If you have a medium-sized or large credit card balance
Depending on your card issuer, there’s a good chance your minimum payment will be well above the lender’s absolute minimum due — especially if you owe several thousand dollars.
For example, say you owe $5,000 on a credit card with a 0% promotional APR, a "2% plus interest" minimum repayment policy and a minimum payment floor of $35. Your lender’s calculation might look something like this:
- 2% of your balance, plus fees, if applicable, and interest ($0, in this case). So: $5,000 x 2% (.02) + $0 in fees and interest = $100 minimum payment
As $100 is definitely higher than your lender’s $35 floor, that’s how much you’d be charged.
You might pay more if your lender uses a more involved formula
Some lenders make the minimum payment calculation more complicated by adding an additional formula for comparison. As a result, you may be asked to pay more than $100 on a credit card with a $5,000 balance and a 0% promotional APR.
When a lender compares three possible minimum payment amounts, your minimum payment will be determined by whichever amount is higher. So in that scenario, your lender’s calculations might look something like this:
- 2% of your balance plus fees and interest. So: $5,000 x 2% (.02) + $0 in fees and interest = $100
- 3% of your balance, excluding fees and interest. So $5,000 x 3% (.03) = $150
- Your lender’s minimum payment floor (which, in this scenario, is $35).
$150 is larger than $100 and $35, so the lender in this scenario would charge you $150.
A late payment wrinkle
But what if you also owe an additional payment, such as a past due balance or a late fee? In that case, you might pay more than $150. But the fees would be added to the first calculation (2% plus fees and interest) rather than the second.
So, for example, if you missed the previous month’s payment deadline and incurred a $40 fee and still owed $100 from the previous months, your lender’s first calculation would look something like this:
- $5,000 x 2% (.02) + $0 in interest + $40 in fees + $100 past due = $240.
$240 is larger than $150, so that’s how much you can expect to pay at minimum.
What happens with a lower credit card balance?
If you have a low balance, your minimum payment amount could be much smaller. Still, unless it's really tiny, it will likely reflect your lender’s minimum payment floor, rather than 1% to 3% of your balance.
For example, if you’ve whittled your balance down to $1,000, then your lender may charge you based on whichever amount is higher:
- $1,000 x 2% + interest ($0 in this example) = $1,000 x .02 + $0 = $20
- $1,000 x 3% = $1,000 x .03 = $30
- $35
In this scenario, the lender’s $35 minimum payment floor is higher than 2% of your balance, plus interest ($20 in this example); it's also higher than a flat 3% of your balance.
If, however, your lender had a smaller minimum payment floor, such as $25, then your minimum payment would equal $30.
Annual fees and other charges may also affect your payment
Consider, for example, how much you’d pay if you only owed $300 on a card with a 0% promotional APR. If you didn’t owe any other fees, you’d almost certainly be charged the lender's flat minimum (say, $30). But if you also owed a $35 annual fee on the same card, then that fee would also be included in your monthly payment.
So, in that scenario, your lender’s formula might look something like this:
- $300 x 2% = $300 x .02 + interest ($0 in this case) = $6. As a result, the base minimum payment for the card (not counting fees) is $30.
- A $30 minimum payment + a $35 annual fee= $65.
So the minimum payment for this card would be $65.
If your balance is less than your card’s minimum payment, you'll owe the full balance
If your lender’s minimum payment is $25, but you only owe $20, you won’t be expected to pay that extra $5. Instead, your minimum payment in that scenario will be $20.
Is paying the minimum on a credit card bad?
It’s not good. In most cases, paying just the minimum amount due on a credit card is riskier than it’s worth. It’s also exorbitantly expensive if you stick to paying just the minimum amount for more than a month or two.
Imagine, for example, that you owe $3,000 on a card with a competitive APR (say, 13.99%) and a 2% minimum payment policy. If you pay at least $270 a month, you could potentially knock out your balance within a year and pay roughly $230 in interest, according to the Federal Reserve Bank of Dallas's Payment Calculator.
But if you paid just the minimum amount due for as long as you carried a balance, your debt would more than double and it would take you decades to get rid of it. Instead of paying a couple hundred dollars in finance charges, you’d pay nearly $3,750 in interest, the Fed estimates.
There are rare cases, though, when it might make sense for you to pay only the minimum amount due — but only if your plan is temporary:
- If you’re in such a tight cash crunch that you’re concerned about missing other bills, then paying as little as you can get away with could give you some crucial breathing room.
- Alternatively, you may decide to pay just the minimum amount due for a month or two if you have a 0% APR card and need to temporarily free up cash. This is also a risky strategy, but it could make sense if you’re disciplined and confident in your ability to bounce back quickly.
Just make sure you set up safeguards to ensure you resume making larger payments as soon as possible. For example, set a strict deadline and surround yourself with reminders of that deadline so you don’t forget to increase your minimum payment as soon as you free up more cash — the last thing you want to do is to get used to paying just the monthly minimum.
The CARD Act and minimum payments
A major consumer protection law called the Credit CARD Act of 2009 requires lenders to handle minimum payments differently than they treat other fees and balances. Lenders must include:
- A minimum payment warning on every single credit card statement. This warning is based on your current balance and spells out exactly how long it will take you to pay off your debt if you pay just the minimum amount due. It will also spell out how much interest you’ll pay over time.
- An estimate of how much it will cost you to pay off your balance in three years.
- The amount you need to pay to make that happen.
Lenders must also apply any payment you make in excess of your minimum payment amount to the balance with the highest APR. This helps protect you from having all your payments go toward the cheapest balance. But there’s a catch: Your lender can — and often will — apply your minimum payment toward the balance with the lowest interest rate.
Note that this rule doesn’t apply to deferred interest credit cards that are near the end of their promotion. In that case, a lender must apply all your payments within the promotion’s last two billing cycles toward the deferred interest balance.
A lender’s payment allocation policy can make using a balance transfer card or a high interest cash advance tricky. For example, if you transfer a balance to a card with a promotional balance transfer APR and then make new purchases, your minimum payment is unlikely to go toward your new balance if it charges a higher APR. Instead, if you have more than one balance on a single card, you’ll need to pay more than the bare minimum to make a dent in the most expensive balances.
Does paying the minimum payment hurt your credit score?
Paying just the minimum amount due won’t directly affect your credit score. However, it will indirectly hurt it if it traps you in a debt cycle that causes your credit utilization rate — a key component of your FICO Score and VantageScore — to stay high.
Your utilization rate measures the total amount of debt you owe compared to how much credit you have available. A high utilization rate depresses your score, while a low utilization rate improves it.
Ideally, you should aim for a utilization rate well below 30%. But if you stick to paying just the bare minimum, you’re unlikely to inch much closer to that goal. Even worse, the longer you pay just the bare minimum, the more your debt will grow, along with your utilization rate.
If your score suffers too much, you could also get hit with an even bigger credit score whammy: a surprise credit limit cut from your issuer. Even if you never miss a payment, your lender could still get spooked by your high balances and cut your credit limit. That, in turn, will set off another vicious cycle, harming your debt utilization rate and depressing your score even more.
Can you pay less than the minimum payment on a credit card?
No. If you pay less than the minimum amount due, your lender will treat it as a non-payment. You need to pay at least the minimum amount due to avoid defaulting on your card.
You may be able to negotiate a lower minimum payment, though, if you’re in true financial distress.
Your success with negotiating a lower minimum will depend, in part, on your lender. But it’s worth a shot: Even if your lender denies you a lower minimum payment, they may offer you other alternatives, such as trimming your interest rate, pausing your payments or enrolling you in a credit card hardship program.
FAQs about credit card minimum payments
How do credit cards calculate minimum payment?
Every lender has its own formula and minimum payment policy. But most big lenders base minimum payments either on a small percentage of your credit card balance, or a flat minimum payment fee that’s typically around $20 to $40. In general, you can expect to pay whichever amount is bigger: 1% to 3% of your credit card balance or the lender’s minimum payment amount.
How do minimum payments work on a 0% APR card?
You’ll still have to make a monthly payment, even if you don’t owe interest. But since your APR is 0% for a limited time, your minimum payment could be much lower than it would be otherwise. For example, if you owe $5,000 on a card with a 0% promotional APR, a 19.99% standard APR and a minimum payment of 2% plus interest, your minimum payment with the 0% promotion will be $100.
Why did my minimum payment go up?
It depends. Did your credit card balance go up this month? A higher balance could cause your minimum payment amount to go up, too — especially if your balance is so large that 1% to 3% of the balance is well above your lender’s minimum. Alternatively, your minimum payment may increase if your credit card APR goes up. However, you should have received a warning ahead of time if your lender independently hiked your standard card APR. Under the Credit CARD Act, lenders are required to give you at least 45 days’ notice before increasing your APR. If your card is tied to the U.S. Prime Rate, your APR will also go up in tandem with a higher prime rate. However, as of 2021, that explanation is unlikely since the prime rate has stayed at 3.25% since 2020.
How can I lower my credit card minimum payment?
If you have a lot of debt, the best way to lower your minimum payment is to pay down as much of your credit card balance as possible. Assuming you can qualify for it, you may also lower your minimum payment by transferring your debt to a card with a lower APR or a smaller minimum. If you’re in financial distress, your lender may also agree to temporarily lower your minimum payment, trim your APR or temporarily pause your payments. Call your lender to see what options are available to you.
Why does my credit card say $0 minimum payment due?
It depends. Have you already paid off last month's credit card charges? If so, then you may not owe another credit card payment, even if you technically still have debt leftover on your card. That's because your current credit card balance isn't necessarily the same as your statement balance. Your statement balance is made up of charges that you made during your most recent billing cycle, and these charges won't be due until the close of the billing cycle. Another possibility: Some lenders offer rare opportunities to skip making a minimum payment, without getting hit with a delinquency (for example, you might receive a deferment after a major disaster, such as a wildfire or hurricane, in your region). A lender might also offer a payment free period for other various reasons.
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