Reference
Frequently Asked Questions
Detailed answers to the questions that come up around minimum payments, credit score, faster payoff strategies, and balance transfers.
If yours is not among them, send it to questions@
Section I
How minimums are calculated
What is the typical minimum credit card payment?
Approximately 2% of the statement balance with a $25 to $35 floor. At the 2026 average US balance of $6,659, that is roughly $133 per month.
How do banks calculate the minimum payment?
Most US issuers use one of two formulas. Flat percentage: max(floor, balance * percent), commonly 2% with a $25 floor. Interest plus 1%: max(floor, monthly interest + 1% of balance). Both formulas are common at major US bank issuers; specific terms vary by card. Always verify against your own cardholder agreement.
Why does my minimum payment change every month?
The minimum tracks your balance. As you pay down the balance, the percentage portion of the minimum drops. On interest-plus-principal cards, the interest component also moves with the balance and the daily-balance-weighted average.
What is a minimum payment floor?
A fixed dollar amount (usually $25 to $35) that the minimum cannot drop below regardless of how small the balance becomes. Once the percentage calculation falls under the floor, the floor takes over.
What happens if my balance is below the floor amount?
Your minimum payment equals the full balance plus any interest that accrued. You cannot owe less than what is on the statement, so the floor caps out at the balance itself.
Section II
Impact on debt and credit
Does paying only the minimum hurt my credit score?
Not directly. On-time minimum payments protect your payment history (35% of FICO). The indirect drag is utilisation: minimums barely reduce the balance, so utilisation stays high, which suppresses your score.
Will paying the minimum keep my account in good standing?
Yes. As long as the minimum is paid by the due date, the account is current. There is no late mark, no penalty APR trigger, and no negative report to the credit bureaus from a minimum payment alone.
Is it ever okay to pay only the minimum?
Short term, yes, especially if you are routing extra cash to a higher-priority debt or building a small emergency cushion. Long term, no. The interest cost compounds. Use minimum payments as a stop-gap, not a strategy.
What happens if I pay less than the minimum?
Three things happen. The shortfall triggers a late fee (usually $30 to $40, capped under CFPB rules). The account is reported as delinquent if the payment is more than 30 days late, dropping your score sharply. Some cards trigger the penalty APR (often around 29.99%) on the entire balance.
Does my minimum payment count towards my credit limit?
It restores available credit by the principal portion of the payment, which is typically a small share of the total payment. The interest portion does not restore credit, because interest was an expense, not a balance reduction.
Section III
Paying off faster
How much extra should I pay to be debt-free in 2 years?
Use the calculator on the homepage with your specific balance and APR. As a rough rule, the 24-month payment is approximately balance / 24, plus a small interest premium (about 1% of balance per month at 22% APR).
What is the fastest way to pay off credit card debt?
If you qualify, a 0% intro APR balance transfer paired with a payment plan that clears the balance inside the intro period. If you don't qualify, the debt avalanche (highest APR first) on multiple cards or a fixed payment well above the minimum on a single card.
Should I pay off my smallest balance or highest interest rate first?
If you have the discipline to stay on plan: highest interest rate first (avalanche). If past attempts have stalled: smallest balance first (snowball). Both beat the unstructured default by a wide margin.
How do I set up automatic payments above the minimum?
Most issuers let you set a custom fixed amount in their app or website under autopay settings. Pick the 36-month escape payment from the calculator (or any number above the minimum) and set it once. Removes the temptation to default back to the minimum each month.
Section IV
Balance transfers and other options
What is a balance transfer and how does it help?
Moving a balance from a high-APR card to a 0% intro APR card. You pay a 3% to 5% transfer fee upfront and zero interest during the intro period (typically 12 to 21 months). If you clear the balance inside the intro window, you pay only the fee, not the interest.
Is a 0% balance transfer card better than paying the minimum?
Almost always. The 3% fee on a $5,000 balance is $150. At 22% APR, you would pay $150 in interest in roughly eight weeks. The transfer breaks even fast and saves thousands if you can pay it down inside the intro period.
Can I do a balance transfer if I have fair credit?
Most top-tier 0% transfer cards require a FICO score of 670 or higher. With fair credit (580-669), options are limited and shorter intro periods (6 to 12 months) are more common. A debt consolidation loan from a credit union may be a better fit at this score range.
What is debt consolidation and is it better than a balance transfer?
A consolidation loan is a fixed-rate, fixed-term personal loan used to pay off credit cards. Typical APRs run 8% to 15%, well below credit card rates, but above 0% intro transfer cards. For borrowers who can't qualify for a 0% transfer or have balances too large to transfer, consolidation is the next best lever.