The Strengths and Weaknesses of Paying the Minimum Amount on a Credit Card Balance

Most lenders allow you to switch your payment settings online.

Most lenders allow you to switch your payment settings online.

Making the minimum payment on your credit card may make you feel like you're saving a few dollars and leaving more cash in your pocket every month, but longer term, it could be costing you a small fortune. If you can afford to, it's best to take care of as much of your outstanding card balance as you can, if only for the satisfaction of not giving your money away in interest payments to the credit card companies.

Fulfilling Your Responsibilities

If you don't make at least the minimum payment on your credit card account every month, you'll soon notice the effect on your credit score. The main advantage of paying at least the minimum amount when your monthly installment rolls around is that you'll be protecting your credit-worthiness. If you pay less than your minimum payment or pay nothing at all, your credit score will take a dive and your card issuer will hit you with late fees.


When you pay just the minimum amount on your account each month, you become the type of customer lenders love. Credit card companies privately refer to people who clear their balances every month as "freeloaders" and "leeches," according to the attorney and author Howard Strong in his book "What Every Credit Card Holder Needs to Know." Paying $10 above a minimum payment of 1 percent on a card balance of $1,500 with an annual percentage rate of 18 percent would save you $1,236.76 in interest payments, according to the Bank of America. Use the Federal Reserve's credit card repayment calculator to determine the cost of paying the minimum balance on your card.

Disposable Income

Clearing just the minimum off your card each month may boost your current disposable income, but you'll only be extending the amount of time it takes you to pay off what you owe in full. Bank of America calculates that paying an extra $10 a month on a card balance of $1,500 with an APR of 18 percent would result in a debt being cleared 116 months sooner than if just a minimum payment of 1 percent were made every installment.


If you have a high credit card balance, consider paying it off in full each month and then using your card for your everyday spending. Doing so would mean you wouldn't be paying any interest to your card issuer at all. If you can cut your spending each month, you'll be able to gradually whittle down the amount of your debt. Alternatively, transfer your balance to a card that charges a low rate of interest and increase your payments.


About the Author

Michael Roennevig has been a journalist since 2003. He has written on politics, the arts, travel and society for publications such as "The Big Issue" and "Which?" Roennevig holds a Bachelor of Arts in journalism from the Surrey Institute and a postgraduate diploma from the National Council for the Training of Journalists at City College, Brighton.

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