Monthly Minimums and Credit Card Debt

The minimum payment is the smallest amount required by your bank to keep your credit card account active , in good standing, and to not report you late to the Bureau. However, if you only make this payment each month you can take decades to settle your debt.

Imagine that you owe $10 thousand, and the minimum payment amount is $250, which is 5% of the total balance. It will take 80 months or 6.6 years to finish paying it down. Crazy, right?

A few things to keep in mind:

1. Only in cases of emergency. Pay the minimum to avoid default interest only if you have an unforeseen event that prevents you from covering the full payment of your monthly payment.

2.Know the percentage of your minimum payment. Find out from your bank what percentage of your minimum payment will be for the payment of principal. It will allow you to have a better picture about your debts.

3.Pay more than the minimum. Make your payments complete every month, including your total debt. This will avoid high interest, commissions and surcharges.

Restructure your debt

If your debt is so high that you have no choice but to pay the minimum, we recommend refinancing your debt with another creditor for at a lower annual rate. It can be through a bank or a debt consolidation company that allows you to settle your debt and pay comfortably with an amount equal to or less than your minimum payment.

Before resorting to this measure, you must know how long it will take you to settle your debt with the minimum payments and the annual interest rate of the card. Keep in mind that the new credit should allow you to pay your debt in less time than it would take with your creditor(s), and that the monthly payments equal to or less than those you currently make.


The minimum payment is an emergency resource that allows you to keep your credit account active. If you find yourself faced with having to pay the minimum monthly amount on your credit cards, the best thing you can do is to refinance your debt before falling into default. Once that happens it will be harder for you to get cheaper financing to get out of debt.

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