30 years to pay off $10k
The real cost of minimum payments
Paying only the minimum on a $10,000 credit card balance at 20% APR takes more than 30 years and costs over $15,000 in interest — more than the original balance. Minimum payments are designed to maximize lender profit. Adding just $50 extra per month cuts the payoff to under 10 years and saves over $10,000 in interest.
Level
Try calculatorKey takeaways
04 · ideas- Minimum payments are designed to maximize lender profit
- $10k at 20% APR → 30+ years and $15k+ interest on minimums
- Paying $50 extra/month cuts payoff to under 10 years
- The minimum payment trap is the most expensive mistake in personal finance
Credit card minimums are typically 1–2% of your balance, or $25–$35, whichever is higher. They're designed to keep you paying interest for as long as possible.
The brutal example:- $10,000 balance at 20% APR
- Minimum payment: $200 (2%)
- Time to pay off: 32 years
- Total interest paid: $15,432
You borrowed $10,000 and paid back $25,432.
The fix: Pay more than the minimum. Even $50 extra per month cuts the payoff to 10 years and saves over $10,000 in interest.