Why the minimum payment never ends
A minimum payment is usually a small percentage of your balance — often around 2% — with a floor of twenty or thirty units of currency. The trap is that it is calculated on the balance. As the balance falls, so does the payment, which means the amount going to principal falls too.
You end up in a shrinking loop: pay a bit, owe a bit less, pay a bit less. On a card at 22% APR, a large share of that minimum payment is interest in the first place — sometimes almost all of it. The balance moves in millimetres.
This is not an accident of the maths. A minimum payment is set so the debt is serviceable indefinitely, which is a perfectly rational objective for a lender and a terrible one for you.
The fix: pay a fixed amount
Nothing about the debt changes except one behaviour — you decide the payment instead of letting the balance decide it. Pick a number you can hold every month and never lower it, even as the balance falls.
The effect is dramatic, because every extra unit goes straight to principal, and the interest charged next month drops accordingly. The comparison above shows both paths on your actual numbers.
Stop adding to it first. None of this works while new spending lands on the same card. Before you optimise the payoff, move your everyday spending to a debit card for a couple of months. Paying down a balance you are still growing is like bailing out a boat without patching the hole.
How the interest is actually charged
Most issuers compute interest daily on the average balance, but the monthly approximation above lands within a rounding error and is far easier to reason about. What matters is the shape: interest is charged on what you still owe, so it falls only as fast as your balance does.
One important exception — if you pay your statement in full every month, purchases usually carry a grace period and you are charged nothing. The interest only begins once you carry a balance, and in many cases carrying a balance also forfeits the grace period on new purchases.
Things worth doing before you start
- Ask for a lower rate. A five-minute phone call, and a surprising number of long-standing customers get one. It costs nothing to be told no.
- Look at a balance transfer. A 0% introductory period can put every payment straight onto principal — but only works if you clear it before the promotional rate ends, and the transfer fee is real money.
- Order your debts. With more than one card, the order matters. The debt payoff calculator compares tackling the smallest balance first against the highest rate first.
- Find the money. If the payment you need is not obviously there, the 50/30/20 budget calculator shows where it might be hiding.