What is a credit card minimum payment?

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A credit card minimum payment is exactly what you’d expect: it’s the minimum you must repay to your card provider every month in order to avoid extra charges. Your monthly minimum payment is worked out based on your credit card’s interest rate (APR) and the amount you have borrowed.

Different credit cards set different standard monthly minimum repayments, but a typical example might be stated as ‘1% of your card balance plus interest and any charges you owe, or £5 - whichever amount is greater’.

What if I’m unable to make the monthly minimum repayment on my credit card?

If you can’t pay the monthly minimum repayment on your credit card, don’t bury your head in the sand: contact your lender immediately.

Failure to pay the monthly minimum without notifying your credit card provider could result in additional charges being added to your account, and is ultimately likely to affect your credit history - and therefore your chances of being able to borrow money in future.

However, if you speak to your lender as soon as you realise there is a problem, it’s possible that you might be able to negotiate a small repayment break and the waiver of extra fees while you get your finances in order. 

 

How long will it take to pay off my credit card in full if I just make the monthly minimum repayment?

Of course it will depend on the amount you have borrowed and the APR on your card - but as a general rule of thumb it is likely to take years (if not decades) for you to repay a sizeable credit card balance if you only ever make the monthly minimum repayment.

This is because - as a consequence of your minimum payment being calculated as a percentage of your balance - the amount you will repay each month will reduce at the same time as your total debt decreases.

Different credit cards set different standard monthly minimum repayments, but a typical example might be stated as ‘1% of your card balance plus interest and any charges you owe, or £5 - whichever amount is greater’.

In other words, you’ll repay slightly smaller amounts each month, stringing out the length of time that it takes to pay off your balance completely. This could mean that it takes as long as 27 years to clear a debt of £3,000 at 17.9% APR (based on a minimum payment of 1% of your card balance plus interest).

A simple way to avoid this is to fix your monthly credit card repayment at an affordable level. If the option to do this isn’t on your monthly statement, give the provider a call to set it up. This way, as your debt goes down your regular repayments will stay the same, enabling you to pay off your whole balance more quickly.

This will also save you a lot of money in interest charges. Remember: the longer it takes you to repay your credit card balance, the more your debt will cost you overall.

How can I repay my credit card more quickly?

If you’re trying to clear a credit card debt, you might want to consider applying for a balance transfer credit card. Balance transfer cards allow you to shift debt from one card to another, and usually come with either a 0% promotional period or a long-term, low rate of interest on transferred debts. Opting for one or the other based on your needs should help you to clear your credit card balance more quickly and cheaply.

Our helpful credit card calculator will help you work out how long it will take to pay back your credit card based on your current monthly payment and APR. You can also see how your repayment amounts will need to change if you want to clear your balance by a certain date.

Where to next?

How to get accepted for the credit card you want

Advantages and disadvantages of credit cards

Which type of credit card is best for me?

How much does a credit card costs?

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