Why Minimum Payments Are a Trap
Credit card minimum payments are designed to keep you in debt for as long as possible. They are calculated as a small percentage of your balance — usually around 1% — which means most of each payment goes to interest and very little to reducing the principal. The result is that a balance you could clear in three years with a fixed payment instead takes two decades or more at the minimum, and the total interest paid often exceeds the original purchase.
How Is the Minimum Payment on a UK Credit Card Calculated?
Most UK credit card agreements set the minimum at around 1% of the balance plus that month's interest, with a small floor (typically £5) applying if the calculated amount is lower. Some cards use a higher percentage — 2% or 3% — which sounds similar but dramatically shortens the repayment timeline. The exact method is set out in your credit agreement; the calculator lets you pick the convention that matches yours and shows the outcome — plus a note on what paying a bit more each month would save.
How Long Does It Take to Clear a Balance Paying Only the Minimum?
For typical balances at typical rates, the answer is measured in decades. A £3,000 balance at 22% APR with a 1% minimum can take over 25 years to clear and cost more than £4,000 in interest alone — more than the original debt. The same balance with a fixed £100 monthly payment clears in about 3 years and costs around £1,000 in interest. The calculator shows the exact figures for your balance, your APR and your chosen payment method.
How Much Do I Save by Paying More Than the Minimum?
Almost always a small fortune. The key insight is that the minimum payment shrinks as your balance shrinks, so the early months make almost no dent in the principal. A fixed payment — even a modest one — keeps the pressure on the principal every month. The calculator shows what happens at your current payment and notes how much sooner you'd be debt-free if you paid £50 more a month. For most people, the saving runs into thousands of pounds.
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Disclaimer: Finance Atlas is not regulated by the FCA. Estimates only, not financial advice. Always consult a qualified, FCA-regulated adviser for your personal circumstances.