What is a minimum payment?

If there’s a balance on your credit card, you need to make at least a minimum payment each month.

Your three monthly payment options

Just pay the minimum

It’s perfectly fine to make the minimum payment, but to reduce your balance and keep any interest costs down, it’s a good idea to pay more than the minimum whenever you can.

Pay more than the minimum

As long as the minimum payment is covered each month, you can vary how much extra you pay each month to suit your budget. You can make additional payments at any time.

Pay the full statement balance

If you pay off your balance in full every month, you could benefit from up to 56 days interest free on purchases. When you pay off a balance, just look out for residual interest.

If you only ever pay the minimum

You could pay more in interest, fees and charges than towards clearing your balance if you only pay the minimum each month. The Financial Conduct Authority calls this persistent debt.

Halifax might get in touch with you if you’re in this situation, offering advice on how to increase your payments and take control of your balances.

More on persistent debt

How paying more could cut your borrowing costs

Example card – an interest rate of 24% on a balance of £3,000

Imagine you have a credit card with an effective interest rate of 24%. You’re focussed on paying off your balance of £3,000, so you don’t make any new transactions.

Making the minimum payment

Starting at £84, reducing over time.

Time to clear your balance:
28 years and 3 months

Interest paid: £5,214

Total paid: £8,214

The costs are high.

Making a fixed payment

Sticking to £84 each month.

Time to clear your balance:
4 years and 10 months

Interest paid: £1,866

Total paid: £4,866

The costs are less.

Making a higher payment

Fixed at £124 each month.

Time to clear your balance:
2 years and 9 months

Interest paid: £981

Total paid: £3,981

The costs are even less.

We’re here if you need support

If you’re ever finding it difficult to make credit card payments, please let us know so we can help.

Help with money worries

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Frequently asked payment questions
 

  • The calculation might vary depending on who your lender is, but at Halifax your minimum payment is either 2.5% of your balance plus any interest and fees, or £5 – whichever is higher.

    Below are two simple examples, based on a credit card with a balance at 0% interest for 12 months:

    Example one
    Imagine your balance is £2,000. 2.5% of this is £50, so your minimum payment is £50.

    Example two
    Imagine your balance is £199. 2.5% of this is just £4.98, so your minimum payment is £5.

    Even if a 0% introductory or promotional interest rate applies to your balance, you must make the minimum payment each month, by the due date shown on your statement or online account.

  • To help you to stay on track, you could set up a Direct Debit to make payments to your credit card account automatically each month, but there are a few payment options available, including online transfers, debit card or cheque payments.

    Ways to pay your credit card

A summary on minimum payments

If there’s a balance on your credit card, you need to make at least a minimum payment each month.

 

  • It’s a good idea to pay more than the minimum to reduce your balance and borrowing costs. At Halifax, the minimum monthly payment is 2.5% of your balance, or £5 – whichever is higher.
  • If you consistently pay just the minimum, you could fall into persistent debt.
  • Most lenders offer support with money worries if you’re ever finding it difficult to make payments.

Want to read more?
 

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.