Methodology
How Credit Card Minimum Payments Are Calculated
Two formulas dominate the US market. Knowing which one your card uses tells you whether your minimum is on the low side (slower payoff, more interest) or the high side (faster payoff, less interest).
Updated April 2026 · Industry ranges. Always verify against your own cardholder agreement.
Formula 1
Flat percentage of balance
Payment = max(floor, balance × percent)
The percentage is typically 1%, 2%, or 3%. The floor is typically $25 to $35.
Worked example. A $4,000 balance with the standard 2% method: 4,000 × 0.02 = $80. That sits comfortably above the $25 floor, so $80 is the minimum due. Drop the same calculation to a $1,000 balance: 1,000 × 0.02 = $20, which is below the $25 floor, so $25 takes over.
This is one of two common methods used by major US bank issuers. Subprime and store-branded cards typically use a higher percentage (3% to 5%).
Formula 2
Interest plus a percentage of principal
Payment = max(floor, (balance × APR ÷ 12) + (balance × principal %))
Principal percent is typically 1%. The floor is typically $25 to $35.
Worked example. A $4,000 balance at 22% APR. Monthly interest = 4,000 × (0.22 ÷ 12) = $73.33. 1% of principal = $40. Sum = $113.33. Above the floor, so the minimum is $113.33.
This formula always covers the interest charge in full and forces at least 1% of the balance toward principal each month. The minimum runs higher than the flat 2% method, but the payoff is also faster, and the math cannot drift into negative amortisation. It is the second of the two common methods used by major US bank issuers.
Compare
Your number, both formulas, side by side
Type your balance and APR. The block below runs both formulas and shows the first-month minimum, payoff timeline, and total interest for each.
By Tier
Industry tiers (April 2026)
Specific terms (exact percentage, exact floor amount, fee handling) vary by individual card and change over time. The table below shows industry tiers compiled from publicly available agreement language. It is for orientation only. Your own cardholder agreement is the only authoritative source for your card.
Verify against your cardholder agreement. Find the section on minimum payment calculation. The agreement is in the welcome packet that came with your card and is available as a PDF in your online account.
| Tier | Formula type | Percentage | Floor (range) | Notes |
|---|---|---|---|---|
| Tier A: Major bank issuers | Interest charge plus 1% of statement balance | 1% of balance | $25 to $35 | The minimum covers all monthly interest plus 1% of principal. Used by several large national issuers. |
| Tier B: Major bank issuers | Flat percentage of balance | 2% of balance | $10 to $35 | Greater of a flat 2% of the statement balance or the floor amount. Used by several large national issuers. |
| Tier C: Major bank issuers (with fees) | Interest plus 1% of principal plus fees | 1% of principal | $25 to $35 | Same as Tier A but late fees and over-limit fees are added on top. |
| Tier D: Subprime / store-branded cards | Flat percentage, higher band | 3% to 5% of balance | $25 to $40 | Higher minimums are common on credit-builder, secured, and store-branded products. |
Compiled April 2026 from publicly available agreement language. Industry ranges only. Subject to change. Verify your specific terms in your cardholder agreement.
Find Your Formula
Three places your card's exact formula lives
- Your cardholder agreement. Look for a section titled "How We Calculate Your Minimum Payment" or "Making Payments". This is the legally binding source. The agreement is bundled with your welcome packet and is available as a PDF in your online account.
- Your monthly statement. Every statement has the federally required Minimum Payment Warning box (12 CFR § 1026.7(b)(12)). It tells you, in plain numbers, how long payoff takes at your current minimum and the alternate payment that clears the balance in 36 months. Pull up last month's statement and look at page one or page two.
- Your issuer's website. Most major issuers publish their cardholder agreements on a dedicated page. Search the issuer's site for "cardholder agreement" plus your specific card name.
The Statute
Why issuers must disclose the formula
The Credit CARD Act of 2009 (codified at 12 CFR Part 1026, Regulation Z, Truth in Lending) requires every issuer to disclose the minimum payment calculation method in the cardmember agreement and to print, on every monthly statement, a "Minimum Payment Warning" box showing how long payoff takes at the minimum and the alternate payment that would clear the balance in 36 months.
That box is your built-in cross-check on this page. Pull up your most recent statement; the 36-month figure should align with what our calculator returns for your balance and APR. Any difference is fees, promotional balances, or a quirk in your card's specific formula.
Questions