What is a credit card minimum payment?
Everything you need to know about minimum payments on credit cards
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, 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
How do I find out how much my minimum payment is?
Your monthly credit card statement will tell you your minimum payment amount.
You can also log in to your credit card account online and view it there. 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.
How do minimum payments work on credit cards?
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, 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
Why should I pay more than the minimum payment?
If you 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 £2000 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.
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?
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.
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..
Our free credit monitor 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.
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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