Credit Card Minimum Payment Calculator – Forbes Advisor

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Sometimes you can only make the minimum payment on your credit card debt, and that’s OK. Making the minimum payment is better than missing or skipping a payment which will have an adverse impact on your credit score, but it will cost you more in the long run due to mounting interest fees.

If you’re trying to determine how long it will take you to pay off your credit card just by making the minimum payments each month, use Forbes Advisor’s minimum payments calculator to find the answer.

Know that if you’re feeling overwhelmed by the amount you owe on your credit card, Forbes Advisor’s guide to relief has strategies and advice debt that can help.

Information/tooltips for calculator:

Current balance
Tooltip: This is the amount you owe on your credit card.

Credit card interest rate (APR)
Tooltip: This is the interest rate you’re charged on your credit card

Minimum required payment
Tooltip: Your minimum required payment is typically anywhere from 2% to 4% of your total balance for that billing cycle, depending on your particular card agreement. The dollar amount of your monthly payments will decrease as your balance is paid down, but this will also increase the amount of time it will take you to pay off your card balance.

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Frequently Asked Questions (FAQs)

Is it OK to only make minimum payments on my credit card?

Carrying debt on your credit card is expensive and just making the minimum credit card payments each month will pile on the interest charges for every month you carry a balance. The longer you carry your debt, the more expensive it becomes and making only the minimum payments will prolong the time it takes to pay it off.

But, making minimum payments is still better than defaulting on your debt or skipping a monthly payment altogether. Those actions can damage your credit score and make other loans both more difficult to get approved for and more expensive when you do.

How is the interest calculated on my credit card?

Most credit cards for your interest charges using an average daily balance method, which means your interest is compounded and calculates every day, based on a daily rate. In other words, every day your finance charges are based on the balance from the day before.

The daily rate is determined by dividing your credit card’s APR by 365 to find the rate per day. So for a credit card with an APR of 17%, the rate per day would be 17/365, or 0.0466%. That daily rate interest is then multiplied by your balance that day. Since the average daily balance is compounded, each day the calculation is based on the day before.

What happens to your balance and credit score when you pay only the minimum on your credit card?

Making the minimum payments won’t directly affect your credit score. But paying the minimum due to credit cards can lead to problems with your credit utilization, which is the percentage of your credit card limit that’s in use, according to your credit reports. Your overall balance will increase as the interest charges accrue on your card each month, which in turn will cause your utilization rate to rise. And an increase in credit can move your credit score in the opposite direction.

What happens if I miss or skip a monthly payment?

If you don’t make the minimum monthly payment on your credit card, the delinquency process begins. In most cases, you’ll have 30 days to make the payment without any damage to your credit report. After that, your credit card may be suspended and you won’t be able to make any new charges. If you don’t take action to pay off what you owe, your account may get sent to a third-party collection agency, which will have a negative impact on your credit report.

If you’re experiencing financial difficulties, you should call your credit card company as soon as possible before you miss the payment. Many credit card companies offer hardship programs that are based on your particular circumstances.

Does my credit limit reset after making the minimum payment?

After making the minimum—or any other size—payment on your credit card, you’ll have access to that much more of your available credit. For example, if you have a card with a $10,000 credit limit and you owe $9,000 you only have $1,000 left until you hit your limit. But if you make a minimum payment of $575, once the payment clears, you’ll then have access to $1,575 until you hit your limit.

Keep in mind, spending that close to the limit on your credit card means your credit utilization on the card is high and can have an adverse impact on your credit score.

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