Paying minimum balance on credit card? How long will the debt last

Credit Card Debt

Paying the minimum amount on your card is very comfortable, no doubt. You pay only a small amount each month and continue to actively use the credit card, without worrying.

But, there will come a point where it is not so comfortable because your debt will grow to such an extent that it will take you a very long time to pay it off. And, if you continue to use your card, it could become unpayable.

What is the minimum card payment?

The finance company which has given you the credit card offers an option to just pay the minimum in addition to the total debt. But many individuals don’t realize that the minimum payment can make the debt on your card unpayable.

The minimum payment is the amount by which your card will remain active, but will always accrue interest. In order to determine it, the bank calculates it in two ways:

1.- It charges you a certain percent of the total of your credit line.

2.- It charges you certain percent of your balance.

Whichever formula your bank uses, the reality is that the minimum payment is a really small amount, so many people are tempted to pay it.

Why does the debt grow if I pay the minimum?

When you pay the minimum payment on your card, the finance company takes a portion of it for principal and another for interest, which causes the interest to continue to accumulate. Paying the minimum payment makes you a slave to your card for years.

Also, remember that interest is charged on the total debt and not on what you have to pay that month. So if you only pay the minimum and continue using your card, your debt grows much faster.

How long could the debt last by paying the minimum?

Let’s say you owe $35,000 on a classic card with a credit limit of $70,000. It would take you 6 years to finish paying it off, as long as you don’t use your card during this time.


But, in addition, during this time you would pay the bank about $49,000 of pure interest. So, as you can see, it is not a good idea from any perspective because you’re bleeding money and at the same time hurting your credit score.

How to stop paying so much interest?

1.- Pay the minimum so as not to generate interest.

If possible, you can start, paying much more than the minimum, until you lower your debt to reasonable levels, although you will still continue paying a lot of interest.

2.- Change your debt

If the minimum payment for not generating interest has become unpayable, the best thing to do is to look for an option to change your credit card debt, or cards, which will allow you to save interest, have a fixed payment and create a savings and investment plan.

3.- Pay in a timely manner

If you have just applied for your credit card, just remember to never pay interest to the bank by making minimum payment, you should always pay the total debt.

Always remember your payment deadline, if you are very forgetful you can download an application to help you remember it, even the calendar that comes integrated into your cell phone can be a good ally.

Author Bio:

I am Nikesh Mehta, owner and writer of this site.

Nikesh Mehta - Image

I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.

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