Minimum card payments trap 41% of users in $13,000 interest

More than 4 in 10 U.S. cardholders pay only the minimum on at least one card, a habit that could stretch repayment to 27 years and add $13,000 in interest.

"The minimum payment is not a debt repayment strategy, it's a debt maintenance strategy," said Corinna Rose, a certified financial planner at Bell Investment Advisors. "Making only the minimum keeps the account in good standing, but it often does very little to meaningfully reduce the balance."

The average credit card balance among U.S. cardholders with debt is $7,756, while the average APR is 20.94 percent, according to LendingTree. At those levels, assuming no additional charges, paying off the debt while making minimum payments could take nearly 27 years and cost nearly $13,000 in interest alone, according to Bankrate's credit card calculator. The share of minimum-only payers rises to 58 percent among Gen Z cardholders ages 18 to 29.

The habit carries consequences beyond interest costs. A payment that is 30 days late may be reported to credit bureaus, potentially lowering a credit score by 60 to 80 points for someone with excellent credit, according to Experian. A reported late payment can stay on a credit report for up to seven years, making future borrowing more expensive.

Paying early cuts daily interest accrual

Credit card interest is typically calculated daily, so cardholders carrying debt can reduce interest costs by paying sooner rather than waiting for the statement close or due date, said Nathan Sebesta, a certified financial planner and owner of Access Wealth Strategies.

"You can make payments at any time," Sebesta said. "If you're using a credit card for rewards or convenience, there's nothing wrong with paying the balance down multiple times throughout the month and getting it back to zero as often as possible."

Zero balance is the target

Ideally, cardholders should avoid carrying a balance from one month to the next, Sebesta said. "The goal should be to use the credit card as a payment tool, not as a way to spend money you don't already have."

Carrying a balance month after month also makes it harder to track actual spending, Rose said, since part of each paycheck is already committed to purchases from previous months. Consistently being unable to pay the balance in full is "a warning light on the dashboard," she said. "It doesn't mean a cardholder has failed, but it does mean it's time to take a closer look at spending habits, create a realistic budget, or potentially take a temporary break from credit cards altogether."

A credit card payment is considered late if the minimum amount isn't paid by the due date. Issuers may charge a late fee, but payments generally aren't reported to credit bureaus until they're at least 30 days overdue, per Credit One Bank. If a payment is missed, Sebesta recommends paying it immediately and contacting the issuer — before the 30-day mark, cardholders may be able to avoid having it reported and could potentially have the late fee waived.

Rose recommends turning on autopay in the card's online account or app settings. "Don't rely on memory when technology can do the work," she said. "One autopay setting can save years of credit headaches."

The stakes are significant for consumers carrying balances. At the current average APR of 20.94 percent, even a modest balance compounds quickly — a $2,000 balance at that rate accrues roughly $35 in monthly interest alone. For the 58 percent of Gen Z cardholders who regularly pay only the minimum, the habit formed early in their credit history can create a debt burden that persists for decades and constrains their ability to qualify for mortgages, auto loans, or other credit at favorable rates. Cardholders should verify current rates, fees, and reporting policies against the latest official disclosures from their issuers and credit bureaus.

This article is for informational purposes only and does not constitute investment advice.