The minimum payment trap: why paying the minimum keeps you in debt
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Quick answer: Paying only the minimum on a credit card covers mostly interest and barely reduces the balance. A £2,000 balance at 24% APR with a 2% minimum payment would take over 25 years to clear and cost more than £3,500 in interest.
Credit card minimum payments are designed to keep you borrowing. They are typically 1–3% of the balance or £5, whichever is higher. Paying the minimum satisfies the lender but means your debt shrinks painfully slowly while interest accumulates. Understanding the maths is the first step to escaping.
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Read the full credit cards & loans guide →Primary source: www.gov.uk/consumer-protection-rights/credit-cards
How minimum payments are calculated
Most UK credit cards set the minimum as the greater of a fixed sum (often £5–£25) or a percentage of the balance — typically 1% to 3% — plus any interest, fees, or insurance charges from the previous month.
As the balance shrinks, the minimum payment shrinks too, stretching repayment over decades.
The real cost in numbers
On a £2,000 balance at 24% APR with 2% minimum payments: the first payment is about £40, mostly interest. After five years you have paid roughly £1,200 but still owe about £1,400.
Paying a fixed £80 per month instead clears the same £2,000 balance in about 30 months and costs around £400 in interest — saving over £2,900.
Breaking free from the trap
Set a fixed monthly payment above the minimum — even £20 extra makes a significant difference. Treat it like a loan with a fixed end date.
If you cannot pay more, a 0% balance transfer card gives you a window to pay down the principal without interest accumulating.
If minimum payments are unaffordable, contact the lender or a free debt charity before missing payments.
Common questions
Does paying the minimum hurt my credit score?
Paying the minimum on time avoids missed-payment marks, but high utilisation (using a large share of your limit) hurts your score regardless of whether you pay the minimum or more.
Can my lender increase the minimum payment?
Yes. Lenders can change minimum payment formulas. They usually give notice, but persistent minimum-only payments may trigger higher minimums.
Is it ever OK to pay just the minimum?
Briefly, during a genuine cash crisis, paying the minimum protects your credit file. But it should be a short-term measure with a plan to increase payments.