The Minimum Payment Trap: Why $100/Month on $5,000 Takes 9 Years
Credit card companies set minimums to maximize interest. Here is how much the minimum payment really costs you.
A $5,000 credit card balance at 22.9% APR with a $100 monthly minimum payment takes 9 years and 3 months to pay off. Total interest paid: $6,117 — more than the original balance. You pay $11,117 total for $5,000 of purchases. The credit card company earns more from your interest than you spent on the items.
The Power of Paying More
Adding just $100 extra per month ($200 total) cuts payoff time to 2 years 8 months and total interest to $1,640. That extra $100 saves you $4,477 and 6.5 years. Adding $200 extra ($300 total): 1 year 7 months, $930 interest. The math is dramatic — every extra dollar attacks the principal, which reduces the interest calculated next month, creating a snowball effect.
The Strategy
Pay the minimum on all cards except the one with the highest interest rate. Throw every extra dollar at that one. When it is paid off, roll that payment into the next highest rate card. This is the avalanche method and it saves the most money mathematically. If motivation matters more than optimization, pay off the smallest balance first (snowball method) for quick psychological wins.