A $60 Minimum Payment Can Turn $2,000 Into $2,793

The minimum payment solves one problem: it keeps this month's bill current. It does not tell you whether the balance is disappearing at a useful speed. Credit-card issuers use different formulas, often a flat amount or a percentage of the balance, and paying only the minimum usually means a longer payoff and more interest. 1

The episode follows an official example: a $2,000 balance at 18% takes 3 years 11 months and $793 of interest at a $60 monthly payment. Raise that payment by $100, and the same balance falls to 1 year 2 months and $231 of interest. The practical move is to find the payoff estimate on your statement, then choose a fixed amount above the minimum when your budget allows. US statements also show a three-year payoff comparison based on the current balance and no new purchases. 2

If the minimum itself is unaffordable, contact the card issuer immediately and explain what you can pay; many issuers may adjust payments during a financial emergency. 3