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How Is Your Credit Card Minimum Payment Calculated?

Your minimum monthly payment is usually based on a percentage of your balance.

A woman is sitting at her desk using a calculator.
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The minimum payment on a credit card is the lowest amount you can pay to remain in good standing with your credit card company -- though you may face interest if you carry a balance. The exact approach varies from issuer to issuer: some charge a flat percentage, while others factor in interest and fees. But to stay on top of your credit score, you should familiarize yourself with how your minimum payment is determined. 

What is the minimum payment on a credit card?

A minimum monthly payment is the least amount of money the lender will accept for your statement balance to maintain a positive credit history. Making this payment ensures that you don't get hit with late fees, penalty APRs or negative marks on your credit report, but any remaining balance on your credit card will accrue interest -- making it more challenging to pay off the balance on the card. 

How can I find my minimum payment?

Your minimum payment amount is listed on your monthly billing statement, which is either mailed to you or posted on your online account. You can also call the number on your credit card and ask a representative about the amount due. Card issuers must provide a calculation of how much it will cost to pay off your debt if you pay only the minimum monthly payment each month, thanks to the Credit CARD Act of 2009. This information should be located on your billing statement and can help you establish a long-term plan. 

How do credit card issuers calculate minimum payments?

The minimum payment is usually calculated as a percentage of your statement balance. The flat percentage of the statement balance used to calculate the minimum payment is typically 2%. Still, minimum payments vary from issuer to issuer. It can also be a fixed amount, such as $25 or $35, if your account balance is under a certain threshold. 

What happens if I only make the minimum payment on my credit card?

When you only pay the minimum due, you risk racking up interest, making your monthly payments feel like a costly, never-ending loop. To minimize harm to your credit score, try to pay more than the minimum -- if not the entire statement balance -- to work on paying down your balance while saving money on interest.

Can minimum payments change from month to month?

Monthly minimums can change due to missed payments, paying less than the minimum, or paying more than the minimum. If you frequently miss payments or pay less than the minimum, the issuer may increase your APR, which could lead to a higher minimum payment requirement.  

The bottom line

Paying only the minimum on your credit card keeps your account in good standing. It'll help you avoid late payment fees, but it won't help you get out of credit card debt quickly. To save money and put yourself in good financial standing, it's best to pay more than the minimum if you can find a way. 

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