What is the minimum payment on a credit card?
Everything you need to know about minimum payments on credit cards
Key takeaways
Make at least the specified minimum payment on your credit card each month or face a missed payment fee
It’s advisable to set up a direct debit with your credit card issuer for the full balance, minimum payment, or a fixed amount
Pay more than the minimum whenever possible to keep down interest charges
Consistently meeting payments on your credit card debt demonstrates financial responsibility and positively impacts your credit rating
What is a credit card minimum payment?
A credit card minimum payment is the minimum amount you need to pay off on your credit card balance each month.
In the UK, your minimum monthly payment will always be at least 1% of your outstanding balance – although it could be more depending on your card provider.
If you don’t make the minimum payments on your credit card, you’ll be hit with a late charge, and it could hurt your credit score.
How to pay a credit card minimum payment
When you get your credit card statement or bill each month, it’ll show you the minimum you need to pay. There are two ways to pay:
By direct debit. You can set up a direct debit with your credit card issuer to pay a certain amount each month – that could be the full outstanding balance of your credit card debt, the minimum payment or a fixed monthly amount
By manual payment. You could also simply make a bank transfer to your credit card provider when you get your bill – but make sure you don’t forget, or you could face high penalty fees if you don't make your credit card payments on time
Understanding your credit card balance
You might see different balances listed on your credit card account – a statement balance and a current, full or total balance. The difference is as follows:
Full balance: The full, total or current balance on your credit card represents the total amount you owe, including recent transactions, unpaid balances, and any interest charges. This figure accounts for all activity on your card, up to the present moment
Statement balance: The statement balance is the total amount you owe at the end of your billing cycle. It includes all charges made during that period, but doesn't account for any new transactions made after the billing cycle's closing date
When it comes to your minimum monthly repayment, the statement balance is the most crucial factor.
Credit card issuers typically require you to pay a certain percentage of your statement balance as the minimum payment, often around 2-3% of the statement balance or a specific minimum amount, whichever is greater.
Failing to meet this minimum payment can result in late fees and negatively impact your credit score. You can read more with our guide to explaining credit card statements.
How do I find out how much my minimum payment is?
Your monthly credit card statement from your lender will tell you your minimum payment amount along with your statement balance to pay off what you owe in full.
You can also log in to your credit card account online to view your minimum payment, statement balance and current balance.
If you still can’t find it, contact your bank and ask them to tell you.
How is my minimum payment calculated?
Your monthly minimum payment will be calculated in one of two ways:
As a percentage of the amount you owe – for instance, if you’ve borrowed £2,000 on your card, and your minimum payments are set at 2.5%, you’ll have to pay at least £50 per month off your balance, plus any interest
As a flat fee – say £10 or £20 a month
You don’t get to choose between these – your credit card provider will work out which of these is larger, and that’s what you’ll have to pay.
If you only pay back the minimum amount required on your card each month it’ll take longer to fully clear your debt. This also means you’ll pay more interest overall – so it’s a good idea to always try to pay off more than the minimum whenever possible.
Our credit card calculator shows you how long it may take to clear your credit card balance if you only pay the minimum amount each month.
It also calculates how much faster you’ll pay off your debt and how much interest you can save if you increase your monthly payments.
What credit card monthly payment options are there?
Credit card holders have three monthly payment options:
Make the minimum payment. This ensures you won’t be hit with any additional charges for late or underpayment. But unless you’re on a 0% deal it will mean you pay interest on the remaining balance, and it will take longer to clear the balance in full
Pay more than the minimum payment. This will help chip away at your credit card balance more quickly and reduce the amount of interest you pay. Even if you can’t pay off the full balance, it’s often a good idea to pay as much as you can towards it
Clear the full balance. By paying off your entire statement balance you should be able to avoid interest charges, particularly on card purchases. This option ensures a clean slate every month and is the most cost-efficient way of using a credit card
Why should I pay more than the minimum payment?
If you can afford it, paying more than the minimum payment is a good idea. Not least because it means you'll...
Clear your debt faster
Pay less in total interest
Improve your credit score
Example 1: You’ve borrowed £2,000 on a credit card and the card has a 2.5% minimum monthly payment. The interest rate or APR is 25%.
If you only make your minimum payments, it will be almost 35 years before you’ve fully paid off your card. You’ll pay more than £5,000 in interest overall.
Example 2: For the same card deal above you’re able to pay more each month – for example £100 a month – the debt will be gone in just two years. The total interest you’ll pay will be £530.
So if you can afford it, paying off more than the monthly minimum is always cheaper in the long run.
You can see how long it will take you to pay off your credit card with our credit card calculator. Try adding £10 or £20 to your monthly repayments to see how much you could save overall.
The table, below, also shows the benefit of paying more than the minimum balance on a credit card. It assumes an outstanding balance of £2,000, an APR of 20% and a minimum payment of 3% of the outstanding balance, or £25, whichever is greater.
Payment amount | Time to pay off debt in full | Total interest paid | Total cost (debt + interest) |
|---|---|---|---|
Minimum payment only | 18 years | £5.400 | £7.400 |
Minimum + £50 extra/month | 5 years 3 months | £1,400 | £3,400 |
Fixed £250/month | 11 months | £230 |
|
Clearing in full | 1 month | £0 |
|
Personal Finance & Insurance Expert
Our expert says
“Don’t be fooled into thinking the minimum payment amount is all you need to repay each month – it’s just the amount that keeps your head above water.
"Need convincing? Look at the examples in this guide or use our credit card calculator to see how much more money expensive having a credit card can work out, if you only pay the minimum amount. The numbers can be eye-watering.”
Other useful guides
If you’d like to find out more about credit cards and how to keep on top of your payments, we’ve got plenty of handy guides, including...
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Frequently asked questions
What if I can only afford to pay the minimum payment?
It’s usually best to only spend on a credit card when you can afford to pay off the entire balance – but if you can only afford your minimum monthly payments, there are still some ways to avoid getting stuck in persistent debt.
For example, if your monthly minimum payment is high, consider getting a balance transfer card.
These cards typically offer 0% interest for up to two years or more – which means lower monthly payments, and breathing room to help you pay off the debt more quickly.
What happens if I can’t afford my minimum repayments and need to make a late payment?
If you think you can’t afford the minimum payment on your credit card, speak to your card issuer straightaway.
It should help you come to an agreement to help you manage your payments – for instance, by reducing or pausing your payments for a while.
Bear in mind that this will usually mean your debt lasts longer, since you’ll still be accruing interest during this period.
If you are going to have a missed payment or make a late payment, don’t just ignore the situation.
Otherwise, you are likely to face late payment fees that will worsen your debt situation and may also damage your credit rating.
There are other places you can seek free and impartial help if you’re facing financial difficulties, including the charities Citizens Advice and StepChange or the government’s Money Helper service.
Does making the minimum payment affect my credit score?
Making only the minimum monthly repayment on your credit card is unlikely to affect your credit score in the short term.
But if you continue to use your credit card then your debt is likely to grow over time – and this can have a negative impact on your credit score.
This is because if your debt is high relative to the total amount of credit you have available, lenders tend to view this negatively.
If you miss a payment then not only will you be hit with late fees from the card issuer, but your credit rating could be affected as it shows you are struggling to handle your finances.
Our free Credit Score helps you to keep track of your credit score and you’ll be alerted if we spot anything suspicious on your account.
How can I make sure I meet my credit card payments?
One way to ensure you meet at least the minimum payment for your credit card is to set up a direct debit for the minimum amount.
If you want to cut down the interest you’re paying, a balance transfer credit card allows you to move an existing card balance to a new credit card with a 0% interest rate.
This could help you reduce your overall balance quicker. Use our eligibility checker to find cards you’re eligible for and see your chances of getting the card deal – all without affecting your credit score.
Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
Reviewer
Jonathan Leggett
Former Senior Content Editor
With over 15 years of experience in online content and journalism, Jonathan is a former MoneySuperMarket’s editor at large and works across our Broadband, Mobiles, Energy and Money channels. Along...
