How do minimum payments work for credit cards?

Explaining a credit card minimum is very simple; it is the minimum that the bank requires you to repay on your credit card every month in order to avoid any extra charges. Not everyone’s minimum payment will be the same, just as not everyone’s credit limit (how much you are entitled to borrow per month) is the same. Your credit card minimum will be worked out based on your own credit card’s interest rate (APR) as well as the amount you have borrowed.

Different cards will set a different standard for the minimum requirement to be repaid each month, but a typical rate will be around 1% of your cards balance plus interest and any charges that you owe. £5 is also a common minimum amount.

How do you pay the minimum amount?

If you pay off your credit card manually each month, rather than by standing order than you should see available to you the options reading along the lines of:

  • “Pay card in full” or “pay last statement amount, £560”
  • “Pay card minimum, £5”
  • Other amount

Choosing “other amount” lets you pay off however much you want. Obviously, choosing to pay off your last statement will completely void you of credit card debt for that month. But, to pay the minimum amount, you simply select that option and it will automatically take whatever that amount is from your current account.

If you wish you pay off the minimum amount every month, then you can set up a direct debt/standing order with your bank so that you do not have to actively pay it off, rather it is just taken on a certain date.

What if you cannot make the monthly minimum repayment on your credit card?


If you find that you are in a position where you cannot make the monthly repayment, you should contact your credit card provider rather than simply ignoring it.

If you fail to pay the monthly minimum without informing your lender, it could result in additional charges being applied to your account and it is very likely to have an effect on your credit score. Any damages to your credit score could hurt your chances of obtaining finance in the future.

However, informing your credit card provider as soon as you know there will be an issue with paying back your minimum, it is possible that they might give you an extension or that you may be able to negotiate a small repayment break which does not include any additional fees until you can get your finances in check.

Payday loans



You could consider a payday loan to help pay off or consolidate any debts. A payday loan is a form of short-term credit which allows you to borrow money which you can then repay once your pay cheque comes in. This way you do not have to get involved with getting in to credit card debt and offers you a bit more time to sort out your finances so that you can continue to pay off your credit card minimum in the future.

Daniel is a loans expert based in London and has been working in the payday loans industry since 2010.