The Minimum Payments Trap (and a Simple Escape Math)

Minimum payments are designed to keep accounts alive, not to get you free. They keep the lights on, but they don’t build momentum.

Why it matters

If you only pay minimums, most of your money goes to interest. That means:

• balances fall painfully slow
• one emergency puts you back to zero
• the payoff date drifts further away every time you miss a month

The simple calculator method (no fancy spreadsheet)

You only need three numbers:

• balance
• APR
• minimum payment

Step 1: Estimate monthly interest

Use this quick approximation:

monthly interest ≈ balance × (APR ÷ 12)

Example:

• Balance: $2,000
• APR: 27%

Monthly interest ≈ $2,000 × 0.27 ÷ 12 ≈ $45

Step 2: See how much of the minimum actually hits principal

If your minimum is $60:

• $60 − $45 = $15 principal

That’s the trap: you’re paying mostly interest.

Step 3: Find the “escape number”

Add a small extra amount until your principal movement feels real.

• Minimum: $60
• Extra: $40
• New total: $100
• Principal now: $100 − $45 = $55 principal

That’s a different game.

Example (rounded/anonymized)

• Card A: $1,400 at 29% APR, min $35
• Monthly interest ≈ $34
• Principal movement: ~$1 per month

Adding $30 turns it into ~$31 principal. Same card, totally different trajectory.

Checklist

• Balance recorded
• APR recorded
• Monthly interest estimated
• Principal portion of minimum calculated
• “Escape number” target set

Common mistakes

• Paying extra on every card instead of one target
• Ignoring APR and guessing the interest hit
• Celebrating “on‑time payments” without checking principal movement

Mini FAQ

Should I stop paying minimums? No. Minimums keep you out of late fees and damage. The goal is to add a focused extra amount.

What if I can’t add extra? Then the win is control and stability: stop fees, lower APR, and build buffer first.

Is this snowball or avalanche? It’s a reality check. Use it to decide where extra dollars matter most.

Next steps

• Start the full system: Start Here
• Build your weekly control panel: Weekly Money Dashboard
• Ask for better terms: Lower APR Call Script
• Grab the free toolkit: Toolkit