Credit Card Minimum Payment Trap Calculator
Paying the minimum feels harmless month to month. See what it actually costs you over the life of the balance, compared to committing to a fixed payment instead.
Your details
Interest you'd save by paying a fixed amount instead of the minimum
$18,734
Minimum payments: time to clear
43 yrs 1 mo
Minimum payments: total interest
$19,863
Fixed payment: total interest
$1,129
Minimum payments only
43 yrs 1 mo
Total paid: $24,863
Your fixed payment
2 yrs 1 mo
Total paid: $6,129
Assumes a minimum payment of whichever is greater: the percentage you entered, or a $25 floor, applied to the declining balance each month, and no new spending added to the card. Real cards vary in how they calculate minimums. This tool gives an estimate only and is not financial advice.
How to use this calculator
- 1. Your current credit card balance and its annual interest rate, found on your statement.
- 2. Most Australian cards use around 2-3% of the balance as the minimum, with a small dollar floor.
- 3. Enter what you could actually commit to paying each month, and see the time and interest difference.
FAQ
Why does paying only the minimum take so long?
Because the minimum is usually a percentage of your current balance, it shrinks every month as the balance drops. You end up paying less and less each month while interest keeps compounding on what's left, stretching the payoff out for years.
Why is a fixed payment better than a percentage-based minimum?
A fixed dollar amount doesn't shrink as your balance falls, so a larger share of each payment goes toward the principal over time instead of just covering interest. That's what closes the gap between minimum payments and a real payoff plan.
What if my fixed payment barely covers the interest?
If your payment is close to or below the monthly interest charge, your balance will barely move or even grow. Aim for a payment comfortably above the interest charge on your current balance to make real progress.
Should I pay off my credit card before investing?
Generally yes if the card's interest rate is anywhere near typical credit card rates (often 15-25% p.a.), since that's a higher guaranteed return than most investments will reliably beat. Clearing high interest debt first is usually the better move.
Related reading
Personal Loan vs Credit Card: Which Is Cheaper for Borrowing?
Real RBA rate data comparing personal loans and credit cards, when each genuinely makes sense, and why the interest-free period matters more than people think.
Debt Consolidation: How It Works (and When It Actually Helps)
How debt consolidation actually works, when it genuinely helps, when it backfires, and how it compares to the debt avalanche and snowball methods.
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Disclaimer
This calculator assumes a minimum payment of whichever is greater: the percentage entered, or a $25 floor, calculated on the declining balance each month, with no new spending added to the card and a constant interest rate. Real card issuers calculate minimum payments differently and may include additional fees. This tool provides estimates only and is not financial advice. If you're struggling with credit card debt, consider speaking with a licensed financial counsellor.