Minimum Payment vs Fixed Payment Calculator
See how paying a shrinking minimum payment traps a credit card balance for years versus locking in a fixed monthly amount.
How it works
Minimum path: payment each month = max(min% × balance, floor), so it falls as the balance falls · Fixed path: the same amount every month until cleared
A credit card minimum payment is recalculated each month as a small percentage of the current balance (with a dollar floor). As the balance drops, the minimum drops too, so less and less goes to principal — the payoff stretches over decades and interest piles up. Committing to a fixed monthly payment instead keeps attacking the principal at full force, which is why the same starting budget clears the debt years sooner and for a fraction of the interest.
Worked example
On $6,000 at 22% APR, a 2%-of-balance minimum starts near $110 and shrinks every month, taking well over a decade and thousands in interest. Paying a fixed $250 every month clears the balance in about 2 years 4 months with far less interest — the difference is the shrinking-minimum trap.
Frequently asked questions
Why do minimum payments take so long?
Because the minimum is a percentage of the balance, it falls as you pay down the debt. Near the end you are paying almost nothing toward principal, so the tail of the payoff drags on for years while interest keeps accruing.
What fixed payment should I choose?
Any amount above the current minimum helps, and the higher the better. As long as it comfortably exceeds the monthly interest, a fixed payment guarantees steady progress instead of the ever-shrinking minimum.
Do all cards use the same minimum formula?
No. A common formula is a percentage of the balance (often 1–3%) plus any interest and fees, subject to a dollar floor like $25–$35. This calculator uses a percent-of-balance-or-floor rule as a representative model.
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Educational estimate, not financial advice. Actual loan terms, fees and interest depend on your lender and credit profile.