Paying only the minimum due on a credit card now can cost you big-time later.

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When you have a credit card balance, it may be tempting to make only the minimum payment required on your credit card statement to stay current on the account. After all, making a monthly payment of only 1% to 3% of the card’s balance – \$20 to \$60 on a \$2,000 balance, for example – seems a lot more affordable than paying the entire statement balance.

You may even think paying only the minimum payment is a smart move, since you can put extra money towards other monthly expenses. However, making only the minimum payment on your credit card can cost you hundreds or even thousands of dollars over time.

### 1. You could be paying for years

When you make only the minimum payment due on your credit card, the credit card issuer isn’t doing you a favor by making that payment amount so low. Paying only the minimum payment may give you some financial breathing room temporarily, but the longer you take to pay off the balance, the more you will pay in the long run.

How much will you pay? It’s easy to find out by looking at your credit card statement, since the card issuer is required to include a minimum payment disclosure of the approximate amount you’ll pay over time if you make only the minimum payment and how long it will take to pay off the balance.

For example, if your credit card has a 15.99% APR, the balance is \$2,000 and you make only the minimum payment amount of \$20 a month, it will take more than 30 years to pay off the balance. If the minimum payment on that same balance is \$60, it will take more than ten years to pay off the card.

### 2. You’ll pay a high price for the minimum payment option

If you pay only the minimum on a card with a 15.99% APR and a \$20 initial minimum payment, you’ll pay more than \$20,000 over 30 years to pay off the balance. If the minimum payment on that same balance is \$60, and that’s all you pay each month initially, it will take more than ten years to pay off the card, and you’ll pay a total of around \$3,300 over 10 years. As your balance decreases, so will the minimum payment amount, which extends the length of time it takes to pay off the balance.

Find out: How Credit Card Interest Works

### 3. Too much debt can lower your credit score

When you make only the minimum payment each month on a credit card, the balance barely budges. Meanwhile, keeping high balances on your credit cards can hurt your credit score. That’s because your credit utilization rate – the percentage of your revolving credit to total available credit – accounts for around 30% of your credit score.

Ideally, you should keep your credit utilization rate below 30%, according to major credit bureau Experian. For instance, if your total credit card debt is \$5,000, and total available credit on all your cards is \$10,000, your credit utilization ratio would be 50%, which is too high and can lower your credit score. However, if your total revolving debt is only \$2,000 in that scenario, your credit utilization rate would be only 20%.

### 4. You have a greater chance of maxing out your card

When all you make is the minimum payment each month on a credit card, your chances of maxing out the card increase. That’s because the balance remains high due to making small payments. So, as life throws curve balls such as car repairs, home repairs, medical or veterinary bills and other financial emergencies your way, you may have to charge those expenses to the card, too.

Maxing out your credit card raises your credit utilization rate, potentially lowering your credit score. And the higher the balance, the longer it will take to pay it off, especially if you’re paying only the minimum payment every month.

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