What is a credit card minimum payment?

Summary

• A credit card minimum payment is the lowest amount you need to pay by your due date to keep your account current and avoid late fees.
• Minimum payments are typically calculated as 1% to 4% of your balance, depending on your card’s terms.
• Paying only the minimum could increase the amount of interest you pay and extend the time it takes to pay off your balance.
• Paying more than the minimum helps you reduce your balance faster, save on interest, and may improve your credit score.

Understanding how the minimum payment on your credit card works may help you manage your account more confidently. Once you know how it’s calculated and what happens when you pay more than the minimum, you may be able to make more thoughtful choices that support your financial goals.

Understand your credit card minimum payment.

A credit card’s minimum payment is the smallest amount you must pay by your statement due date to keep your account in good standing. Paying it helps you avoid certain credit card fees and the negative impact missed payments may have on your credit score.

However, when you pay only the minimum, you carry your balance into the next billing cycle. That allows interest to add up, making it harder to pay off your balance.

How are minimum payments calculated?

Credit card providers generally calculate minimum payments in one of two ways. With the first method, your minimum payment is a flat percentage, typically between 2% and 4% of your total balance, minus interest charges and other fees. The second method includes interest and fees, but your minimum payment is based on a lower percentage — usually around 1%.¹

Providers might also set a fixed dollar amount — perhaps $25 to $35 — to use if either calculation results in a minimum payment that is under a certain amount. If your total balance is less than that fixed minimum, you may be required to pay it in full.¹

How do you make the minimum payment on your credit card?

Most card providers make it easy to pay the minimum amount due, offering several options so you can choose the one that works best for you.

Common payment methods include:

• Online and through a mobile app
• By phone
• By mail
• At a branch

Many providers also let you set up automatic payments through online or mobile banking. You may choose to pay your minimum amount automatically each billing cycle to help ensure your provider receives your payment on time.

But remember, your minimum credit card payment is based on your outstanding balance. As your balance changes, whether from new purchases, fees, or interest, your minimum payment changes too. Monitoring your statements may help you notice these changes and avoid sending the wrong amount.

Why paying your minimum payment is important.

Paying only the minimum keeps your account in good standing but makes your debt last much longer and cost more in interest. This is because credit card interest accrues daily on your unpaid balance. When you carry a balance into a new billing cycle, the card provider applies your payment to interest and fees first before applying it to your principal balance.

For example, let’s say you owe $2,000 on a credit card that charges a 20% annual percentage rate. That’s approximately $33 of interest accrued in one billing cycle. If your minimum payment is $40, your interest charges get paid first, leaving only about $7 for your principal balance.

This is why credit experts recommend paying more than your minimum whenever possible. Even small additional payments may help lower your balance faster and reduce the total amount of interest you pay over time.

Can you pay more than the minimum payment?

Paying more than the minimum payment is one of the best ways to manage your credit responsibly. It helps reduce your balance faster and lowers the amount of total interest you pay.

It could also improve your credit utilization ratio — an important factor in your credit score. When you lower your outstanding balance, you use less of your available credit, which may have a positive effect on your score.

Take charge of your credit card payments.

Knowing how credit card minimum payments work helps you stay in control of your credit. When you understand the impact of paying the minimum due, you can make smart decisions that help strengthen your financial future.

Sources

¹ Experian, “How is credit card minimum payment calculated?” https://www.experian.com/blogs/ask-experian/how-is-your-credit-card-minimum-payment-calculated/, Accessed on October 29, 2025.