How to Calculate Your Credit Card's Minimum Payment
Updated · Published · By Ali Ahmad, Founder
Common minimum-payment formulas include a percentage of the balance, interest plus a percentage of principal, or a combination of these methods, often with a fixed dollar floor. Your cardholder agreement determines the actual formula.
Your minimum payment isn't random — it follows the formula spelled out in your cardholder agreement. Formulas vary by issuer and card, but they're commonly built from a few ingredients. Here's how those common formulas work, so you can check yours.
Formula 1: Flat percentage of balance
One of the simplest formulas: minimum payment = balance × a fixed percentage (the percentage varies by card). A $3,000 balance at 2% produces a $60 minimum — unless that's below the issuer's dollar floor, in which case the floor applies instead.
Formula 2: Interest plus a slice of principal
Another common approach: minimum payment = this cycle's interest + a percentage of the principal balance (1% is a frequently cited figure; some cards also add fees), sometimes compared against a percentage-of-balance calculation, whichever is greater. This formula ensures the minimum at least covers the interest charged, so the balance (very slowly) declines even at the minimum.
The dollar floor
Many cards also set an absolute minimum dollar amount (the figure varies by card) that applies regardless of the percentage formula, so very small balances still generate a minimum payment worth collecting.
Worked example
These are illustrative formulas, not any specific issuer's terms. A $2,500 balance at 24% APR, using the "interest plus 1%" formula: monthly interest is about $50 (2,500 × 24% ÷ 12), plus 1% of principal ($25), for a minimum of about $75. Compare that to a flat 2% formula, which would produce a $50 minimum on the same balance — a meaningful difference in how fast the balance actually declines.
Why this formula matters more than people realize
Because the minimum is a percentage of a shrinking balance, it shrinks along with it — which is part of why "minimum only" payoff plans can stretch out for decades. See our guide on how long minimum payments really take for real-world timelines.
Estimate yours
Use the Minimum Payment Calculator to model either formula against your own balance and see the full minimum-only payoff simulation.
Frequently Asked Questions
Where can I find my card's exact formula?
Your cardholder agreement (available in your online account or upon request) spells out the exact minimum payment calculation your issuer uses.
Can my minimum payment go up even if I don't add new charges?
Yes — if you miss a payment or trigger a penalty APR, some issuers increase the minimum payment calculation as a result.
This article is for general educational purposes and is not financial advice. Rates and figures cited reflect industry data available at the time of writing and can change.
Sources
- Regulation Z § 1026.7(b)(12) – minimum payment warning on statements — Consumer Financial Protection Bureau. Checked September 25, 2026.