What is a Minimum Payment?

A monthly minimum payment is the lowest possible amount you can pay towards your credit card payments. Paying credit monthly minimum payments is the bare-bone minimum of what you can do in order to pay down credit card debt and should always be avoided whenever possible. Paying minimums is not an ideal situation to be in and is one you should look to avoid at all times.

How Are Monthly Minimums Calculated?

Monthly minimum payments on credit cards can be calculated a whole host of different ways but typically the minimum payment is either a factor of the balance or a factor of the balance and interest rate combined. This percentage can vary but it’s typically anywhere from approximately 1% of the balance (or a minimum of $25) to approximately 4% of the balance.

How Long Will It Take to Pay Down Debt by Making Minimums?

It can vary how long it would actually take to pay down credit card debt by making only the monthly minimums but it can vary from 5, 10 or even 20+ years depending on your interest rate and the amount of debt you’re carrying. Some consumers might think this payoff debt is exaggerated but that is not always the case, especially with higher interest accounts that might not have a very high monthly minimum payment requirement.

Making a minimum payment is typically the worse thing you can do for your financial health. It not only takes ages to pay off your debt but if paying the minimums is all you can afford to do, you are typically teetering along the lines of financial trouble. If this is what you’re doing financially you’re going to need to make a change.

Steps to Avoid Credit Card Debt and Making Minimums

The best step to avoid only making monthly minimums and credit card debt in general is to try to pay off your balance at the end of each month and avoid carrying a balance whatsoever. This is sometimes easier said than done but if you can proactively try to avoid carrying a balance it will undoubtedly be to your benefit. The trickle-down effect of accruing large amounts of credit card debt typically begins by carrying balance. Interest can lead to a slippery slope, this is especially the case with regards to credit card debt since these interest rates tend to be so high compared to other debt obligations.

Treading Water

Nobody typically wants to make only the minimum payment if they can afford to make more. Many clients often feel like they are simply treading water and due to this they become stuck in a vicious revolving cycle of credit card debt. For many consumers they feel like they are simply stuck in place and are unable to make progress on their revolving debt obligations. This cycle can be extremely demoralizing and very hard to get out of it once caught. There are paths out of debt for those looking to get ahead financially.

Ways Out of Paying Minimums

There are multiple ways to get out of making minimum payments for years and years if you feel like your situation is unmanageable. If you feel like your treading water you can consider using a debt consolidation loan, a debt management program or even a debt relief company.