Credit card minimum payments: the true cost of paying the minimum

UK minimum payments are typically set close to the regulatory floor: that month’s interest plus 1% of the balance (with a small cash floor, often £5–£25). Two consequences follow:

• You only ever repay about 1% of what you owe each month — the rest of the payment is swallowed by interest;
• As the balance falls, the minimum falls with it — so instead of finishing the job faster, your repayments shrink, stretching the debt across decades.

That second feature — the shrinking payment — is the trap. It keeps the payment “affordable” while maximising the months you spend paying interest.

Here’s a £3,000 balance at a typical 24.9% APR, repaying minimum-only (interest + 1%, £5 floor):

Read that top row again: minimum payments turn £3,000 of spending into £8,998 of repayments. And the first minimum payment is about £91 — more than the £75 fixed payment that clears the debt 21 years sooner. The difference isn’t the starting amount; it’s that the fixed payment doesn’t shrink.

Take this month’s minimum, round it up, and set it as a fixed direct debit. That’s the entire trick. Because the payment no longer falls with the balance, an ever-growing share of it attacks the capital each month — the same snowball that stretches minimum-only repayment works for you instead.

Want a deadline instead? To clear £3,000 at 24.9% you’d need roughly:

• £285 a month to be done in 12 months;
• £160 a month for 24 months;
• £119 a month for 36 months.

The Credit Card Repayment Calculator computes the exact payment for any balance, APR and target date — and shows the interest each option costs.

The other lever is the APR itself:

• 0% balance transfer — move the debt to a 0% card (typical fee 3–4% of the balance) and every pound of your payment reduces capital. The discipline: divide the balance by the promo months and pay that, because the rate after the promo is usually punishing.
• Structured personal loan — loan rates are typically far below card APRs, and a loan forces a fixed schedule. Compare total costs with the Loan Calculator.
• Ask your lender — under the FCA’s persistent-debt rules, lenders must contact you when you’ve paid more interest than capital over 18–36 months and offer ways to repay faster; they’d rather restructure than watch you revolve forever.

Two respectable strategies:

• Avalanche — pay minimums on everything, throw every spare pound at the highest-APR debt. Mathematically optimal.
• Snowball — attack the smallest balance first for quick wins. Slightly more expensive, psychologically easier to sustain.

Either beats drifting on minimums everywhere. Whichever you choose: fix every payment, automate it by direct debit, and stop new spending on the cards you’re clearing — a debt you keep using is a bath with the plug out.

• Set your direct debit to a fixed amount (or payment in full), never “minimum payment”.
• Treat the card as a payment method, not a borrowing method: if you can’t clear it monthly, it’s a loan at ~25% APR.
• Keep an emergency fund so surprises don’t land on the card — even a few hundred pounds breaks the cycle (see the Compound Interest Calculator for how fast small regular saving builds).
• If repayments genuinely don’t fit your budget, free debt advice (StepChange, National Debtline, Citizens Advice) beats juggling minimums.