Making only minimum payments toward your credit card can be risky. If you make a habit of only paying the minimum amount due each month, it can be easy to rack up a lot of credit card debt over time.
But during times of financial hardship, it also gives you some flexibility to direct money elsewhere without missing a credit card payment.
Before you decide to make a minimum payment toward your card, it’s smart to know exactly how much you’ll owe and how to avoid long-term debt balances with responsible credit habits.
Read more: The best ways to pay off credit card debt
A minimum credit card payment is the lowest amount you’re required to pay each month. Depending on your card issuer, it could range anywhere from 1% to 5% of your statement balance — or more if your balance is very small.
While the minimum payment is generally only a small fraction of your total balance, paying it by your credit card’s monthly due date will ensure that you avoid late fees and penalties.
Whenever possible, try to pay more than the minimum payment due. Paying the minimum may help you avoid penalties, but it won’t keep you out of debt. Any remaining balance begins to accrue interest after your monthly due date — which can quickly lead to lasting high-interest debt.
Related: How to pay off credit card debt when your budget’s tight
It’s best to always pay your credit card balance on time and in full if possible. But if your budget is tight, the option to make only the minimum payment can provide a little relief.
There are plenty of reasons you may need to pay the minimum for a month or two to stay afloat. For example, if you take on an unexpected expense or you lose your job, you may need to reserve the cash in your budget for essentials.
And in today’s economic environment, you’re not alone. The percentage of credit card accounts making only minimum payments reached a 12-year high of 11.04% at the end of 2024, according to data from the Federal Reserve Bank of Philadelphia. That has fallen slightly as of the first quarter of 2025, but it’s still a steep 10.45% of card accounts.
If you are making minimum payments, have a plan to get back on track as soon as possible.
That can help you minimize the costs of paying only a small portion of your balance each month — especially interest charges. You’ll likely owe much more when you begin making full payments again, so consider ways you can reduce your expenses or dedicate more of your budget toward your credit card balance to pay down your debt quickly.
Your specific minimum payment depends on your credit card issuer. Some common ways to calculate a minimum credit card payment include:
Flat percentage: Some issuers charge a flat percentage, such as 2%, of your statement balance for the month.
Percentage plus interest and fees: If you’ve carried a balance from the previous month, your card issuer may charge a flat percentage, say 1%, plus interest and fees that have accrued since your last payment. If you have a past-due payment from a previous month, that may also be tacked on.
The greater of one of the above: Some card issuers determine your rate based on the greater amount between a flat percentage of your balance or a percentage plus interest and fees.
Flat amount: For smaller balances, the card issuer may simply charge a flat dollar amount.
The cardholder agreement you receive in the mail when you open a new credit card will outline your minimum payment formula. You can also access the info from your card agreement through your online account.
Here’s how a few of the options above work in practice, from a few credit cards available today:
$25 or 1% of your balance, whichever is greater. Plus, you’ll pay any interest or late fees, and owe the full balance if it’s less than $25.
The greatest amount between:
Interest and fees charged to your account
2% of your balance
$25 (if your balance is less than $25, you’ll owe the full amount)
You’ll also owe any amount past due or that exceeds your credit limit.
The highest among:
You’ll also pay any penalty fees, a percentage of over-limit amounts, past-due amounts, and plan payments (see rates and fees).
Some credit card issuers offer fixed installment plans for select purchases. For example, you can get Citi Flex Pay on purchases of $75 or more on cards like the Citi Premier® Card and Citi® Double Cash Card.
American Express offers a similar option called Plan It on purchases of $100 or more with cards like the Blue Cash Preferred Card® from American Express (see rates and fees).
If your card offers such an installment plan, the plan’s monthly payment may also be added to your minimum amount due.
Related: Buy now, pay later vs. credit cards — Which should you use for your next purchase?
One of the best things you can do — even if you’re facing financial hardship — is to continue paying at least the minimum toward your credit card every month. In addition to interest charges, missed payments can lead to more severe consequences for your wallet and credit.
For one, missing a payment is costly. Your credit card issuer may charge up to $41 in late fees if you don’t pay by the due date. You can also incur a penalty APR, which is an even higher interest rate that may remain in place for months.
And if you continue to leave your account unpaid, you may see lasting damage to your credit score. If you miss a payment by 30 days or more your card issuer can report the delinquency to the credit bureaus. Since your payment history is the most influential factor in your FICO credit score and negative information can remain on your report for years, missed payments (especially when left unpaid) can have a devastating impact on your credit.
A minimum payment may help you save in the short-term, but there are consequences — especially if you make it a habit to pay only the minimum.
If you don’t pay your balance in full each month, you’ll be charged interest on the amount you carry over to the following month. Your monthly statement will typically provide a “minimum payment warning,” which explains that paying only the minimum amount due will result in interest charges.
With some cards, such as the Chase Freedom Flex®*, you may even get an example to show how long it’ll take you to pay off your balance by paying just the minimum and what you’ll pay in interest.
*All information about Chase Freedom Flex has been collected independently by Yahoo Finance. Chase Freedom Flex is no longer available through Yahoo Finance.
Once you begin accruing interest on your balance, it can quickly lead to lasting debt if you don’t get on top of your payments. Credit card interest rates today can reach as high as 20% APR — and sometimes even up to 30%. The faster you can pay down any remaining balance on your card account, the better.
Credit cards typically offer a grace period on purchases, which is the period between your statement closing date and your due date. During this time, you won’t be charged interest on purchases made during the last billing cycle as long as you pay your balance in full.
Grace periods can vary depending on the card. With the Chase Sapphire Preferred® Card, for instance, it’s a minimum of 21 days. But with the Capital One Venture Rewards Credit Card, it’s 25 days or more. That said, it can’t be shorter than 21 days.
If you don’t pay your total balance, however, you can lose your grace period until you pay it in full. In other words, all new purchases you make with the card will start accruing interest from the date of the transaction.
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