The Truth About Minimum Payments: Why They Keep You in Debt

Intro

Paying the minimum on your credit card keeps you “current,” but it also traps you in debt for years. Here’s why.

🧾 How Minimum Payments Work

• Cover interest + small part of principal.

• Example: $5,000 at 20% APR, minimum ~$100.

📊 The Long-Term Trap

• Paying only minimums could take 20+ years.

• You’ll pay 2–3x the original purchase amount in interest.

Example:

• $5,000 balance.

• Minimums only → payoff in 23 years, ~$7,000 in interest.

• Paying $250/month → debt gone in 2 years, <$1,000 interest.

✅ Why Lenders Like Minimums

• Interest income = profits.

• Designed to keep you paying as long as possible.

👉 I always warn clients: minimums are credit card companies’ best friend and your worst enemy. If you want to escape debt, you have to pay above the minimum.

Final Thoughts

Paying only the minimum isn’t “managing debt” — it’s stretching it out. Even small extra payments make a huge difference.