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Minimum Payments Can Undo a Deal

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For many of us, the holiday season and shopping go hand-in-hand; it can be tough not to pounce on those big deals when you see them. But if you use a credit card to pay, remember you’re borrowing money you’ll have to pay back. What’s more, if you’re counting on making only your card’s minimum payment, you could end up paying much more in interest than you’d save on the deal.

Say you charge $1,500 for the latest electronic gadgets on a credit card with a 19 percent interest rate. If you repay only the minimum amount each month, and your minimum is 4 percent of the outstanding balance (the lowest amount permitted by some issuers), your first payment will be $60.

Question is: If you charge nothing else on that card and continue to pay the minimum each month, how many months will you make payments before you pay off the balance?

It would take you eight years. That’s 106 payments — and you will have paid more than $889 in interest. That means those gadgets would cost you at least $2,389 in the long term.

Not such a deal after all… that is, unless you’re looking for a raw one.

So, before you’re charging off to the big holiday sale, learn more about paying down credit card debt and use this credit card payment calculator to plan your purchases. You can also watch this video about making credit card payments:


Blog Topics: 
Money & Credit


4% monthly minimum payment? That's about double what most credit card companies require. I recommend a 5% monthly minimum payment. I guess the problem is as the debt goes down, so does what 4% or 5% is of the total due, thereby extending the debt for a longer time. Still, 4% or 5% is vastly superior to only paying 2% of the total due. I call a 2% monthly minimum payment the equivalent of "Credit Card Crack".

i was talked into a credit card at a dentist office, she gave my info over the phone as i telling her my social and she said the wrong number and they gave me 8,000 in that was last June paying the minimum on 1,200....I was tricked into this card....can you help me...i been paying 25.00 a month for 8 they want 400.00 for 1 month and 125.00 for 2 months......can you help me and my credit?

Hi Indo,

We encourage you to report your experience by filing a complaint with the FTC at While we do not handle individual matters, we use your complaints to investigate fraud and eliminate unfair business practices.

Here is more information about filing a complaint with the FTC as well as information on credit - including credit cards - that may be helpful to you.



I"m sorry but there has been a miscalculation made in this article. I think the calculation was made with the idea that the 4% monthly minimum payment reduces each month as the principle goes down, thus extending the payment to as many as 106 payments. However, in your article the claim is made that it would take 106 monthly payments of 60 dollars, which works out to 6,360 dollars, which is several thousand dollars more than the total amount this article claims would be paid.

Please keep in mind that besides the miscalculation made in this article, many credit card companies have a 15 to 25 dollar monthly minimum payment which would also shorten the life of this debt as it shrunk.

The real lesson in my opinion is that 4% or 5% monthly minimum credit card payments are vastly superior to 2% monthly minimum payments, I think that is the real story here and one I totally agree with.

-Alessandro Machi, Debt Neutrality Petition Author.

Hi Alessandro,

Thanks so much for your comment. We have revised the post.




The 25 dollar a month monthly minimum payment possibly will shorten the length one has to make payments. Perhaps you could do a follow up showing how much more effective a 5% monthly minimum payment is versus a 2% monthly minimum payment, especially as the debt winds down and the 25 dollar a month minimum kicks in.

Several years ago, our credit card companies started issuing Minimum Payment Warnings, great. Issue is I have been paying twice the minimum amount for five years (which according to their calculations.) would have the account paid off, nope not even close. To whom do I complain?

You can file a consumer complaint with the Federal Trade Commission (FTC) at

As I explained in another response to this article, as you pay down the debt, the amount of that 4% payment drops every month as well. Isn't the real story here that you probably had thousands of dollars of debt and now have just hundreds of dollars of debt?

Making a 5% monthly minimum payment every month will short circuit the mistake of running up a credit card debt above and beyond and hope of every paying it back.

I have well over the amount I could possibly repay as credit limits on cards. Here is how I manage this and having that kind of credit available is a good thing but it must be managed.

Having credit available well above what you can pay can be very helpful to your credit report and credit score. It will reduce the percentage of revolving credit to available credit tremendously.

There is not secret to managing this kind if situation. It is very simple to manage as long as you treat those credit cards as instruments used to pay monthly bills that you re-pay to the card company monthly in full. Any charges allowed to revolve should never be allowed to grow beyond what you can assuredly know you can repay in a short time. For me that time is 6 months maximum. If I am close to the 6 month repayment amount on my credit cards I stop using them for anything other than monthly expenses which I repay in total the same month. That keeps the cards active while I pay down a revolving purchase.\

It is so simple, live as if you had cash only to live. Set a limit on what you can afford to buy and repay in 6 months and make certain you NEVER exceed the limit you set. Everyone can muster that much will power to control their spending. Lastly lknow that running up a credit card in an attempt to defraud a lender is illegal. There are ways they can catch you in the act and no one wants to face those kind if difficulties.

If you want a life style and can not afford it by paying with your cash YOU CAN NOT AFFORD IT WITH A CREDIT CARD. It really is that simple when combined with never being late with a loan payment.

Note: I never place big medical bills on the credit card. Those bills can be negotiated so a small monthly payment can be arranged. If there are to many of them consult a credit counseling agency with a solid reputation of not taking advantage of consumers. Your local consumer Protection agency can help you locate a credit counseling firm.

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