What is the minimum payment on $5,000 at 22.36% APR?

Under the 1 percent plus interest method, the first minimum is $143.17, of which $93.17 is interest and $50.00 reduces the balance. Under the flat 2 percent method, the first minimum is $100.00.

Why does a flat 2% minimum never clear some balances?

A flat 2 percent payment equals 24 percent a year. When the APR exceeds 24 percent, the monthly interest exceeds the payment, so the balance grows while the account stays current. At 29.99 percent, a $5,000 balance grows by $24.96 a month on minimum payments.

Where do I find my card's minimum payment formula?

In the cardholder agreement, in the section on minimum payments, which the Consumer Financial Protection Bureau requires issuers to disclose. The statement shows the balance and APR; the agreement shows the formula.

Home › Credit Card Payoff Calculator › How Is a Credit Card Minimum Payment Calculated?

The minimum-payment ledger · Table No. 41

How Is a Credit Card Minimum Payment Calculated?

Two formulas govern nearly every card statement, plus a dollar floor that applies to both. This article works each one on real balances, shows where the floor takes over, and names the 24 percent APR line above which the flat 2 percent minimum never clears a balance at all.

Filed October 29, 2026 · figures checked against 2026 sources

The two formulas issuers actually use

Every cardholder agreement contains a minimum payment formula, and there are really only two of them in common use, plus a floor that applies to both. The Consumer Financial Protection Bureau, which studied issuer practices for its credit card market reports, describes the first as a percentage of the balance plus the interest and fees charged that cycle, and the second as a flat percentage of the balance. In practice, the first is usually 1 percent of the statement balance plus that month's interest, and the second is usually 2 percent of the balance. Both are subject to a dollar floor, commonly $25 to $35, which applies when the percentage calculation comes out lower than the floor. If the balance itself is smaller than the floor, the minimum is the whole balance. That is the entire machinery. Everything else on the statement, the due date, the grace period, the warning box, is built around these two calculations, and knowing which one governs a card is the difference between a payoff measured in years and one measured in decades.

The 1 percent plus interest method is the one the Bureau describes as most common at large issuers, and it is the default in this site's calculator. Work it on a $10,000 balance at 22.36 percent APR, the Federal Reserve average for accounts assessed interest in August 2026. One percent of $10,000 is $100. The month's interest is $10,000 times 22.36 percent divided by 12, which is $186.33. Add them, and the minimum is $286.33. Of that payment, $186.33 replaces nothing. It pays the interest. Only the $100 reaches the balance. Next month the balance is $9,900, the interest is $184.47, the minimum is $283.47, and the principal slice is $99. The payment falls by about $2.86 a month in the early going, and the principal slice falls with it. That slow decay is the mechanism of the trap, and it is visible in the first two statements, before any compounding has had time to do its work. A cardholder who reads the first statement carefully can see the whole nineteen-year story in miniature: a payment that is two-thirds interest, shrinking every month.

The flat percentage method looks simpler and is slower. At 2 percent of the balance with a $25 floor, the same $10,000 balance has a first minimum of $200, which is less than the $286.33 the other method requires, and the whole $200 goes against a balance that has just grown by $186.33 of interest, so only $13.67 of principal is removed in month one. The payment is 2 percent of whatever the balance is, so it falls as the balance falls, and the interest charge is always close behind it. At 18 percent APR, the flat method on $5,000 takes 370 months, or 30 years and 10 months, and costs $12,327.77 in interest. At 22.36 percent, it takes 1,160 months and costs $53,511.65, because the 2 percent payment exceeds the 1.86 percent monthly interest by only 0.14 percent of the balance, so the balance creeps down by a few dollars a month for decades. At 29.99 percent, it never clears at all: the 2 percent payment is $100, the month's interest is $124.96, and the balance grows by $24.96 a month forever, while the account stays current. That last case is not a hypothetical edge. Store cards and subprime cards carry APRs in that range, and the flat method is the one the Bureau found most often at credit unions and subprime issuers. A cardholder on a flat 2 percent minimum at a high APR is paying on time, every month, and going backward.

The floor: the small number that decides the ending

The floor is the minimum minimum, and it matters more than it looks. When the percentage calculation falls below the floor, the payment stops shrinking and becomes fixed, which is the only point in a minimum-only payoff where the payment shape matches the fixed-payment shape. A $25 floor takes over at the defaults when the balance falls below roughly $873, and the remaining balance clears in about 57 months of $25 payments. A $35 floor would take over earlier, at a balance near $1,220, and the tail would be shorter. A $40 floor, which some calculators use as their assumption, would take over earlier still. The floor is also the reason small balances clear relatively quickly on minimum payments: a $1,000 balance at 22.36 percent has a calculated minimum of $28.63, barely above the $25 floor, so the payment is nearly fixed from the start and the balance clears in 71 months. The floor does not rescue large balances, because it arrives late, but it is the reason the tail of every minimum-only payoff eventually ends instead of stretching forever. When comparing cards, the floor is worth the same attention as the APR: a card with a $35 floor and a 24 percent APR can be cheaper to carry than a card with a $25 floor and a 22 percent APR, if the balance is ever going to be carried to the tail.

Floors also explain why the two formulas diverge so sharply at high APRs. Under the 1 percent plus interest method, the payment always exceeds the interest by 1 percent of the balance, so the balance always falls and the payoff always ends, however long it takes. At 29.99 percent, the $5,000 balance still clears, in 245 months, with $11,264.36 of interest. Under the flat method, the payment exceeds the interest only while the APR stays below 24 percent, because 2 percent a month is 24 percent a year. Above that line, the minimum-only path does not end. The dividing line is exact and worth remembering: any flat-percentage minimum below the monthly interest rate is a payment that never clears the debt. The cardholder agreement states the formula and the floor. The statement shows the APR. Two numbers, read together, say whether the minimum path has an ending at all.

Where to find your formula, and what to do with it

The formula is in the cardholder agreement, in the section on minimum payments, and the Bureau requires issuers to disclose how the minimum is calculated there. Most issuers also describe it in the account app or on the back of the statement, and a call to the number on the back of the card will get a direct answer. What the agreement will not say is how long the formula takes, because that depends on the balance and the APR together, which is why the statement carries the Minimum Payment Warning box instead. The practical move is to take the formula from the agreement, the balance and APR from the statement, and run them through the calculator on this site, which simulates both formulas month by month. If the formula is the flat 2 percent kind and the APR is above 24 percent, the first move is to pay more than the minimum immediately, in any amount, because the minimum alone never clears the balance. If the formula is 1 percent plus interest, the first move is to freeze the first minimum as a fixed payment, which the calculator does with one button, and which cuts the default payoff from 231 months to 57.

New purchases complicate both formulas, because most issuers calculate the minimum on the statement balance including new charges, and interest accrues on the average daily balance, which includes purchases made during the cycle. The grace period, at least 21 days between the statement date and the due date, means purchases paid in full by the due date accrue no interest, but once a balance is carried, new purchases generally begin accruing interest from the transaction date, and the minimum rises to include them. The calculator assumes no new purchases, which is the only assumption under which a payoff plan can be stated at all. A card that keeps being used while it is being paid down is a card whose payoff clock keeps restarting, under either formula. The formula is the map. Stopping new charges is what lets the map lead anywhere.

The new insight

The two formulas differ by a hidden threshold at 24 percent APR. Below it, both methods eventually clear the balance, and the 1 percent plus interest method is faster. Above it, the flat 2 percent minimum never clears the balance at all, because the payment is smaller than one month of interest, while the 1 percent plus interest method still clears it, in 245 months at 29.99 percent. The threshold is not printed anywhere on the statement. It falls out of the arithmetic: 2 percent a month is 24 percent a year. Any cardholder on a flat-percentage minimum should compare the APR with 24 percent before assuming the minimum path ends.

Fees, penalty rates, and the formula after a late payment

Fees enter the minimum calculation under the 1 percent plus interest method, because the formula adds the interest and fees charged that cycle to the 1 percent of principal. A late fee of $40 raises that month's minimum by $40, and the payment goes to the fee before it goes to the balance. A penalty APR, which an issuer can apply after a late payment under the Credit CARD Act's rules, raises the interest portion of every subsequent minimum and lengthens the payoff, sometimes sharply: a balance that was clearing at 22.36 percent and jumps to a 29.99 percent penalty rate moves from a 231-month minimum-only payoff to a 245-month one at the same balance, and the interest total rises by $3,023.15. The penalty rate generally applies to new transactions immediately and to the existing balance after 45 days' notice, and it can be removed after six consecutive on-time payments, which is a concrete reason to protect the payment record even in a month when only the minimum is possible. The formula is mechanical. The behavior around it, on time, in full where possible, no new charges, is what keeps the mechanics from turning against the cardholder.

Worked examples at three balances

Three balances, one APR, one formula, no new purchases. At $3,000 and 22.36 percent, the 1 percent plus interest minimum starts at $85.90, takes 180 months, and costs $4,514.54 in interest. At $5,000, the minimum starts at $143.17, takes 231 months, and costs $8,241.21. At $8,000 and 24 percent, the minimum starts at $240.00, of which $160.00 is interest and $80.00 is principal, takes 281 months, and costs $14,887.00 in interest, a figure that matches the independently published worked example for the same inputs to the dollar. The pattern is consistent: the first payment is roughly 2.9 percent of the balance, two-thirds of it is interest, and the payoff takes roughly fifteen to twenty-three years. The table in the calculator's balance ladder extends the pattern to $1,000 and $10,000, and the fixed-payment ladder next to it shows the alternative at each balance. The formula does not change with the balance. The years do.

Sources

Consumer Financial Protection Bureau, on minimum payment calculation methods (percentage plus interest and fees, flat percentage, and dollar floors) and the Minimum Payment Warning under Regulation Z. NerdWallet, on how credit card issuers calculate minimum payments, summarizing the Bureau's 2015 findings on which methods large issuers, credit unions, and subprime banks use. Federal Reserve, G.19 Consumer Credit release, October 7, 2026 (22.36 percent average APR on accounts assessed interest, August 2026). All payoff figures were computed month by month by this site's calculator under the stated model.