Minimum payments can be misleading
If the payment barely exceeds monthly interest, payoff can take a very long time. New charges, late fees and variable APRs change the result.
Example
On a 12,000 balance at 12% APR, a 500 monthly payment pays down more than the first month's interest of about 120, so the balance should decline if no new charges are added.
Common mistakes
Do not ignore new purchases, annual fees or rate changes. If the payment is too small to cover interest, the balance can grow instead of falling.
Limitations
This is not financial advice. It assumes a constant rate, fixed monthly payment and no new fees or borrowing.
Last reviewed: 2026-05-17