That "" on your credit card statement seems so manageable. That's by design. It's also a trap.
"I had $3,000 in credit card debt. The minimum payment was only $60. Totally affordable! Ten years later, I'd paid over $7,000 and still owed $800."
How Minimum Payments Work
Credit card companies set minimums at about 1-3% of your balance. Just enough to keep you paying forever.
$5,000 balance at 20% APR, $100 minimum payment:
| What You Think | The Reality |
|---|---|
| "I'm paying it off" | 90% goes to interest |
| "I'll be done soon" | Takes 9+ years |
| "I'm saving money" | You pay $9,000+ total |
The Math That Hurts
Every month, most of your minimum payment goes to interest, not principal.
Month 1 on $5,000 at 20% APR:
- Minimum payment: $100
- Interest charged: $83.33
- Principal paid: $16.67
- New balance: $4,983.33
You paid $100 but only knocked off $17 from what you owe.
Watch Out
At minimum payments, you'll pay the balance 2-3 times over before it's gone.
Breaking Free
The Minimum + Extra Strategy
| Strategy | Time to Pay Off | Total Paid |
|---|---|---|
| Minimum only ($100) | 9 years | $9,000+ |
| Minimum + $50 | 4 years | $6,500 |
| Minimum + $100 | 2.5 years | $5,800 |
Every extra dollar goes directly to principal.
Escape Routes
Do This
- Pay more than the minimum - even $20 extra helps
- Pay twice a month - reduces average daily balance
- Target one card - or
- Balance transfer - 0% intro APR can help (if you pay it off)
- Stop adding new charges - use debit while paying down
The Credit Card Rule
Pro Tip
Only charge what you can pay in full each statement. No balance = no interest = credit cards become a tool, not a trap.
Quick Win
Look at your most recent credit card statement. Find the "Minimum Payment Warning" box (required by law). It shows exactly how long payoff takes at minimum vs. a higher amount.