Minimum payments are the smallest amount you can pay each month to keep your account current. While paying the minimum avoids late fees and keeps the account in good standing, it comes with a hidden cost: interest charges. For example, if you owe $3,000 at an APR of 20% and pay only the minimum, it could take more than a decade to fully repay, and you might pay thousands in interest along the way. Issuers structure minimum payments to extend repayment, maximizing their profit through interest.

Consumers are encouraged to pay more than the minimum whenever possible. Even adding $50–$100 to your payment each month can shave years off your payoff timeline and save you significant money. Financial educators often highlight this as one of the most common credit card traps—people think they are “doing the right thing” by paying the minimum, but in reality, they are prolonging debt. Understanding how minimum payments work is essential for responsible credit card use and long-term financial health.