1. What is the Minimum Payment Calculation?

This calculator estimates how long it will take to pay off credit card debt in the UK when making only the minimum payments each month. It accounts for compound interest and shows the true cost of minimum payments.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( P \) — Principal balance (GBP)
• \( MP \) — Minimum payment amount (GBP)
• \( R \) — Monthly interest rate (APR / 12)
• \( T \) — Time to pay off (months)

Explanation: The formula calculates how many months it will take to pay off the debt when making fixed minimum payments that cover at least the interest plus a small portion of the principal.

3. Importance of Minimum Payment Calculation

Details: Understanding how long minimum payments take helps consumers realize the true cost of credit card debt and the benefits of paying more than the minimum.

4. Using the Calculator

Tips: Enter your current credit card balance, the minimum payment amount (typically 2-3% of balance in the UK), and your card's APR. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why does it take so long to pay off with minimum payments?
A: Minimum payments are designed to mostly cover interest, paying down principal very slowly, which maximizes interest paid to the lender.

Q2: What's a typical minimum payment in the UK?
A: Most UK cards require minimum payments of 1-3% of the balance or £5-25 (whichever is higher), plus any interest and fees.

Q3: How can I pay off my card faster?
A: Pay more than the minimum, make bi-weekly payments instead of monthly, or consider a 0% balance transfer card.

Q4: Does this account for changes in minimum payments?
A: No, this assumes fixed minimum payments. In reality, minimums decrease as your balance decreases.

Q5: What if I can't afford more than the minimum?
A: Contact your lender or a debt charity like StepChange for advice on managing credit card debt.