Your card statement shows two amounts you could pay: the statement balance and a much smaller minimum payment. It also lists an APR, and maybe a box headed "Minimum Payment Warning." You can pay anything from the minimum up to the full statement balance. What you pay decides whether you're charged interest, and how much.
APR is a card's yearly interest rate: pay the full statement balance by each due date and purchases usually cost no interest; pay less, and what's left is charged interest.
How does an APR turn into dollars?
APR stands for annual percentage rate. Your statement lists the card's APRs and the types of transactions each one applies to, such as purchases or cash advances. Cash advances usually get no grace period: interest generally starts on the day you take the cash.
Some card companies figure interest daily, the CFPB says. The daily rate is generally the APR divided by 365 or 360, depending on the company. It's charged on each day's balance, and the interest is added to the balance, so interest is charged on interest.
In August 2026, bank credit card accounts that were charged interest averaged 22.36% (Federal Reserve, preliminary). At that APR, the daily rate is about 0.061% (22.36% ÷ 365). To estimate a month's interest, multiply the balance by the APR and divide by 12. Example: carrying $1,000 costs about $18.63 ($1,000 × 22.36% ÷ 12).
What does paying only the minimum cost?
In the CFPB's 2025 review of card agreements, most card companies set the minimum at 1% of the balance plus that month's interest and fees. If a dollar floor is higher, you pay the floor; the most common floor was $40.
Example: you carry a $3,000 balance at 22.36%, make no new purchases, pay no fees, and the APR doesn't change. A month's interest is about $55.90 ($3,000 × 22.36% ÷ 12). So your minimum is about $85.90, and only $30 of it, the 1%, lowers the balance.
- Only the minimum, every month: the minimum shrinks as the balance falls, down to $40. Paying off the $3,000 takes about 11 years (134 payments) and about $3,870 in interest: about $6,870 in all.
- $116 every month (about $30 more than the first minimum): the balance is paid off in 3 years, with about $1,130 in interest, about $4,130 in all.
| How you pay | Time to pay it off | Interest | In all |
|---|---|---|---|
| Only the minimum, every month | about 11 years | about $3,870 | about $6,870 |
| $116 every month | 3 years | about $1,130 | about $4,130 |
At 22.36%, with no new purchases or fees and no APR change. The minimum, 1% of the balance plus the month's interest, shrinks as the balance falls, down to $40.
Sources: Federal Reserve, G.19 Consumer Credit, August 2026 (preliminary); CFPB, The Consumer Credit Card Market (December 2025).
Paying at least the minimum by the due date keeps your account from being late; your statement lists the late fee and any higher APR a late payment could bring. But the minimum doesn't stop interest: while you carry a balance, new purchases are usually charged interest from the day you make them, too.
Grace Period Strategy covers how the grace period works and what ends it. You don't need to carry a balance on credit cards to get a good score, the CFPB says (Myth 1).
What can I do today?
Open your latest card statement.
- If you carry a balance: find the box headed "Minimum Payment Warning." Write down how long paying only the minimum would take and, if the box shows it, the monthly payment that pays off the balance in 3 years. Make that payment your target.
- If you pay in full every month: find your APR for purchases. Multiply your usual statement balance by it and divide by 12. That's roughly what carrying it for a month would cost.
How much of a minimum payment pays down the balance?
You owe $1,500 at 22.36% APR. Your minimum, 1% of the balance plus the month's interest, is $42.95. How much of it lowers what you owe?
- A. All $42.95
- B. $15 ✅
- C. $27.95
Why: $27.95 of it is the month's interest ($1,500 × 22.36% ÷ 12), so only $15, the 1% part, lowers your balance; that's why paying only the minimum is slow.
Where do these facts come from?
- CFPB — What is a credit card interest rate? What does APR mean? (last reviewed August 28, 2023); What is a "daily periodic rate" on a credit card? (last reviewed September 23, 2024) · Checked October 24, 2026
- CFPB — What is a grace period for a credit card? (last reviewed September 23, 2024) · Checked October 24, 2026
- CFPB — How do I get and keep a good credit score? (last reviewed December 12, 2024) · Checked October 24, 2026
- Federal Reserve — G.19 Consumer Credit (October 7, 2026): credit card plans, accounts assessed interest, August 2026 (preliminary) · Checked October 24, 2026
- CFPB — The Consumer Credit Card Market (December 2025): §4.1.1 Minimum payments, p. 70 · Checked October 24, 2026
- eCFR — Regulation Z, 12 CFR 1026.7: Periodic statement (up to date as of October 22, 2026): paragraphs (b)(4), the APRs and the transactions they apply to; (b)(11), the late fee and higher APR a late payment can bring; and (b)(12), the Minimum Payment Warning · Checked October 24, 2026