Important Disclosure: The content provided does not consider your particular circumstances and does not constitute personal advice. Some of the products promoted are from our affiliate partners from whom we receive compensation.
If you require any personal advice, please seek such advice from an independently qualified financial advisor. While we aim to feature some of the best products available, this does not include all available products from across the market. Although the information provided is believed to be accurate at the date of publication, you should always check with the product provider to ensure that information provided is the most up to date.
Table of Contents
- What is a credit card minimum payment?
- How is the minimum payment calculated?
- How is the minimum monthly payment applied to my card balance?
- How does the minimum payment affect your debt?
- How do you pay the minimum monthly payment?
- How can I find out the minimum monthly payment on my credit card?
- What can I do if I’m struggling to pay more than the minimum monthly payment?
All credit card companies charge their customers a minimum monthly payment against debt built up on a card. But the way the minimum payment is calculated, and how much you’ll have to pay, varies between card issuers.
Our guide explains more about credit card minimum payments, including why it is important not to miss a monthly payment and why paying more than the minimum, if you can, is highly recommended.
What is a credit card minimum payment?
This is the minimum (or the lowest) amount you are required to pay towards your card debt balance every month.
Failure to make this payment means you could be hit with a late penalty fee and your credit score could be damaged.
How is the minimum payment calculated?
Most minimum monthly payments are set as a percentage of your outstanding debt balance (including the interest charges) – typically 1% or 2%. Or it could be a flat rate charge, such as £5, for example.
In many cases, the card provider states you must pay whichever is greater.
For example, if your card balance was £1,000 (including the interest charges) and your minimum monthly payment was 2% or £10, whichever was greater, then you would need to pay £20 (which is 2% of the balance).
How is the minimum monthly payment applied to my card balance?
The minimum charge will always at least cover the interest charges on the debt. This is designed so that your balance will fall (unless you then spend more the next month).
Ideally however, you should aim to pay more than the minimum monthly payment if possible. This is so that you can clear your debt more quickly.
The longer you have the debt the more interest you’ll pay and the more expensive the borrowing.
How does the minimum payment affect your debt?
By only paying the minimum monthly payment it will take longer to repay your borrowing — and this is likely to cost you more in interest charges.
If you continue to spend on the card and if interest charges build up, your minimum monthly payment will also increase. This could make it even more difficult to repay the debt in full.
Also as credit card balances increase this can negatively impact on your credit score – affecting your ability to borrow in future.
This is because your ‘credit utilisation ratio’ (the amount of credit you’ve used relative to your available credit limit) will increase. Credit reference agencies, such as Experian and Equifax, view high credit utilisation ratios as a negative and this will affect your overall credit score.
It’s important to avoid spending more than you can afford to repay on a credit card. This means paying off balances every month in full – or by as much as possible. By doing this, you can avoid interest and keep your credit utilisation rate low.
How do you pay the minimum monthly payment?
The best way to ensure you always cover the minimum payment required on your credit card is to set up a direct debit instruction with your card company and your bank.
You can request that your card provider takes the minimum monthly amount, the full balance amount, or another fixed payment of your choice (which will cover the minimum amount plus a bit extra).
If you don’t want to set up a direct debit, it’s important to set a diary note for when your monthly credit card bill is due so you don’t miss it. This way you can organise the payment in time.
How can I find out the minimum monthly payment on my credit card?
The minimum monthly payment required on your credit card will be displayed on your card statement (either online, in-app or on paper). You should also be able to find it in your online credit card account.
If you’re having difficulty finding details of your minimum monthly payment contact your card provider.
What can I do if I’m struggling to pay more than the minimum monthly payment?
If you can switch to a balance transfer credit card with a lower or 0% interest rate for a fixed period this could give you some breathing space to pay off your debt without building up more interest. Some of the best balance transfer cards offer zero interest deals for up to 30 months.
Be aware you’ll usually need a good credit score to be accepted for the best balance transfer card deals. There will also usually be a balance transfer fee, such as 2% or 3% of the balance.
Even so, switching to a lower or 0% interest card could mean you can make savings and pay off your card balance much quicker.
Frequently Asked Questions (FAQs)
What is the typical minimum monthly repayment?
The minimum monthly payment on a credit card will depend on the policy of the card provider. Different companies charge different minimum amounts. But typically the monthly minimum might be 1% or 2% of the outstanding card balance or a flat rate of £5 to £10 for example.
What happens if I can’t afford the minimum monthly payment?
If you are having difficulty meeting your monthly card payments you should contact your card provider to explain your situation. It should be able to offer a solution, which might involve freezing the interest for a time or restructuring the debt to make it more affordable.
Free, independent debt charities, such as Citizens Advice, National Debtline and StepChange, can help you negotiate with your creditors if you are struggling.
Does making the minimum monthly payment affect my credit score?
Making just the minimum monthly payment each month on your credit card won’t affect your credit score. But if you only make the minimum payments and you continue to spend on your card the debt will build up.
This will increase your overall indebtedness which could negatively impact your credit score.
How can I pay off my credit card debt?
To pay credit card debt off more quickly you’ll need to pay more than the minimum monthly payment. Aim to pay off as much as possible and reduce any other card spending.
If possible switch to a credit card with a low or 0% interest rate offer on transferred balances. This way you can pay down the debt quicker.
Can I switch credit card providers if I have a bad credit score?
It may still be possible to switch to a new credit card deal, even if you have a low credit score, but you’re likely to have less choice of cards and you may not be offered the most competitive rates.
There are specialist credit cards for bad credit, but the interest rates tend to be higher than on standard cards.
By making all debt repayments on time you can work on improving your credit score over time. This can help you get access to better card deals and lower rates.
