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FSA · Module 5 companion · Free learning tool

The minimum payment is working for someone. Not you.

Every credit card statement offers you a small, reasonable-looking number. Pay it and you stay in good standing — which is exactly what it's designed to do. Set a balance and an APR, pick a payment strategy, and watch what "just the minimum" actually costs. Every number on this page explains itself.

One debt, month by month: watch the balance fall — or not

The dashed red line is your balance if you pay only the issuer minimum. The solid line is your chosen strategy. The space between them is money that stays yours instead of becoming interest — green when your strategy beats the minimum, red if it falls behind.

Balance $3,000 APR 21.52% 21.52% = U.S. average APR on credit card accounts assessed interest (Federal Reserve G.19, Q1 2026). Strategy
Fixed payment $150
Issuer minimum here = 1% of the balance + that month's interest, with a $25 floor (or the remaining balance if less) — the typical large-issuer formula (CFPB repayment-disclosure rules, Regulation Z Appendix M1; NerdWallet). Exact formulas vary by issuer.

↑ Hover either line to read the exact balance in any month. Click any card below to see where its number comes from.

What an extra $50 actually buys

Same balance, same APR — the only thing that changes is dollars above the minimum. The bars below recompute from your sliders. The first extra dollars are the most powerful ones you will ever put toward this debt, because each one permanently stops its share of the balance from compounding against you.

Understand the ideas behind the chart

Five concepts explain everything you just saw. Open each one.

What APR really means, month by month
APR is a yearly rate, but cards charge you monthly: each month costs roughly APR ÷ 12 of whatever you owe. At the Q1 2026 U.S. average of 21.52% (Fed G.19), that's about 1.79% per month — $53.80 on a $3,000 balance in the first month alone. The balance doesn't feel expensive because the meter runs in small monthly ticks. Add the ticks up — the "Total interest" card above does — and the price appears.
How the minimum is set — and why it's set low
A typical large-issuer minimum is 1% of the balance plus that month's interest, with a floor around $25 (CFPB Regulation Z repayment-disclosure rules; NerdWallet's issuer survey — formulas vary). Read that formula slowly: the interest part just covers the issuer's monthly charge, and the 1% part shrinks your debt by one cent on the dollar. It's calibrated to keep your account current — and to keep the balance alive as long as possible, because the balance is what earns the issuer interest. "In good standing" and "making progress" are two different things, and the minimum is engineered to give you the first without the second.
Compounding, working against you
You've probably seen compound growth praised as the engine of investing. A credit card balance is the same engine in reverse: any interest you don't pay off joins the balance, and next month you pay interest on the interest. The mirror is exact — the same math that doubles savings can double a debt. That's why the "Interest vs original balance" card can pass 100%: given enough time at card rates, the borrowing cost outgrows the thing you bought.
The warning box already on your statement
Federal law (CFPB Regulation Z, the "minimum payment warning") requires your statement to disclose how long minimum-only payoff takes, what it costs in total, and the monthly amount that would clear the debt in 3 years. It's usually a small table near the top of the statement. Most people never read it — but it's the issuer telling you, in regulator-mandated print, exactly what this page just showed you. Find it on your next statement and compare it to the simulator.
Avalanche vs snowball, in one line
With several debts, avalanche (highest APR first) minimizes total interest, while snowball (smallest balance first) maximizes early wins — the math favors avalanche, follow-through favors whichever you'll actually stick to. To run your own list of debts, use the Debt Payoff Calculator.

Check your understanding

You have $3,000 on a card at 21.5% APR and a spare $100 every month. Which builds wealth faster?

Continue the path

Module 5: Debt Strategy Plan your payoff order All learning tools

Method, honesty notes & sources

What this models — and what it doesn't
The simulator replays a single card, month by month: interest = balance × (APR ÷ 12), then your payment, then the new balance — capped at 50 years. It assumes a fixed APR, no new purchases, and no fees (no annual, late, or over-limit fees), all of which makes real minimum-only payoff look better here than it usually is. The minimum formula (1% of balance + interest, $25 floor) is the typical large-issuer version, not universal — some issuers use 2% of the balance, or interest + fees + 1% — so treat the output as the shape of the problem, not a quote. If you set a fixed payment below the real issuer minimum, the math still runs, but in real life that means late fees, penalty APRs, and credit damage on top of what you see. The Fed's 21.52% is an average across accounts assessed interest; your card's APR is on your statement. This page is education about how minimum payments work — not financial advice, and not a personalized debt recommendation.
Sources (every figure dated)
  • Average APR on credit card accounts assessed interest, 21.52% (Q1 2026): Federal Reserve G.19, Consumer Credit (retrieved July 2026).
  • Minimum-payment repayment disclosures, including the statement warning and 3-year payoff amount: CFPB Regulation Z, Appendix M1.
  • Typical issuer minimum-payment formulas (1% + interest and variants): NerdWallet, "How Credit Card Issuers Calculate Minimum Payments" (retrieved July 2026). Formulas vary by issuer; this page uses the 1%-plus-interest version and labels it typical, not universal.
  • Quiz savings rate (4.15% APY): illustrative of competitive high-yield savings accounts as of mid-2026 — an assumption of the exercise, not a quote or recommendation.
  • Payoff dates assume the first payment lands next month from a July 2026 baseline. All other numbers on this page are computed live from your slider inputs by the formulas above. Figures are static baselines, last checked July 2026 — they do not auto-update.