How to pay off your credit cards by just paying the minimum payment

Heather SkompHow to Get What You Want in Life, Unsolicited Advice

Credit cards create a giant leak in your financial bucket, as I know personally. They SUCK. Literally, and figuratively.

At the same time, they’re somewhat necessary to operate in our current world, and if you use them wisely, they can be great tools.

However, if you’re reading this article, chances are you haven’t been using them wisely. 😉

Are you constantly paying more than the minimum payment, then running out of money, and re-charging up your card balances?

This article is about getting rid of the burden of circling the same wagon:

  1. paying more than the minimum every month,
  2. then not having enough money to live the rest of your life,
  3. then charging on your credit cards again to make up the slack.

It’s a seemingly never-ending cycle. Probably because it is.

I do want to say, however, that this article can’t cover everyone’s specific situation with regards to credit card debt, income levels, and other costs of living. This is a general article that can help many of you begin to get a grip on your credit card debt, while at the same time pushing the stress and fear associated with having it farther to the back of your minds so you can focus on other, more important factors in making your life a little more fun to live.

Having said that, since this topic can range from the size of an anthill to the size of Mt. Vesuvius, I am keeping the content of this information strictly within the limits of these criteria:

  1. You can afford to pay your minimum payments
  2. Your calculated minimum payment pays at least some principal on your balance (check this before you start)
  3. There is still some money left over after you pay your minimum payments, and the rest of your basic bills

If your money issues don’t meet this list, then they would be over and above the scope of this article, and will be addressed in an upcoming short ebook I am in the middle of writing. I’ll let you know when it’s ready!

Okay, let’s get started.

Most of the time, we attach a lot of emotion to our credit card bills. We’re embarrassed to be in debt, we’re terrified of how much interest we’re paying, we’re ashamed we charged a $5 Starbucks latte to our card because we didn’t have the cash on us. There are a lot of feelings going on here.

However, the true biggest challenge to credit card debt is ending it. Many people keep credit cards for “emergency purposes” and then use them for everything but emergencies. They think it’s free money (although we all know it’s most definitely not free).

Credit cards have become so much a part of our daily lives that we wouldn’t know what to do without them.

And, in a way, we can’t do without them. We need them to rent cars, often we must use them to pay for things online, and for those of us who have no other debt (me!) they are a necessary evil in order to keep some activity on the ever-lovin’ credit report that is so crucial to prove our financial worthiness in our society.

So how can you get out of credit card debt by only paying the minimum payment? Well, it IS possible, but the first thing you have to let go of is the emotional attachment you have to how much you might end up paying in interest if you do it that way.


True. And that would be your reality, if you paid more than the minimum payment AND THEN QUIT USING THEM.

But you don’t, do you?

You pay off a couple of hundred more than the minimum payment, feel good for about a week that you did your duty, then don’t have any money to go out and have a few beers or pay for that new fan belt you need, and so you whip out your credit card again and rack up a few new charges.

And on and on it goes.

You keep paying it down and then charging it up and keep paying it down and charging it up, and so you are FOREVER in debt and FOREVER paying interest, and you have absolutely no idea how much you’re paying.


And you will be the same folks who think nothing of getting a $300,000 mortgage for thirty years at 5% interest, paying only the minimum payment, which adds up to $279,767.35 in interest over that time period. That’s NOT PRINCIPAL. Just interest. Free money to the bank.

And no one blinks an eye.


Do you see that? And most people don’t even think about paying more than the minimum on their mortgage. Do you?

Now let’s look at your car payment. Most people are spending at least $25-30,000 on a car these days, if you’re even buying one (don’t get me started on leasing). And most car loans are pushing out to seven years as the standard length for loans, just to make the payment seem more reasonable to the untrained (and lustful) eye. So what are you really paying over that time in interest?



for a $30,000 loan at 84 months at 4% interest rate, and that’s still with a $410 payment each month. Ouch. The payment would be a lot higher if the term were shorter, dontcha know.

I know you might be able to get a better deal, but I’m just going with averages here. No screaming at me, okay?

People make minimum payments all the time and don’t even question it.

We all make minimum payments on loans as a regular means of operation, and barely think about the total interest amount we’re paying over time. You just do it, because a) you’ve been conditioned that this is how you pay for things these days, and b) you know it won’t last forever (in theory).

Why not approach your credit card bills the same way? Take away the “OMG I’m NEVER going to get out of this” stress out of your life, and just do what you need to do, and nothing more. Get RID of it.

Now let’s say you have $10,000 in credit card debt, at an average of 15.99% (it might be more, I know, but work with me here). Generally the minimum payment is about 2% of your balance, which in this case comes to about $200. If you paid the minimum payment as of today of $200 every month until the bill is paid off – no more, and no less, even if the minimum changes over time – you would have that bill paid off in less than seven years, and your interest paid would be $6589.05.


In less than SEVEN years. Doesn’t sound so bad by comparison now, does it?

But the greater point is, it would be PAID OFF. No more payments. No more debt. In less than seven years. Without even thinking about it.

Maybe you think seven years is too long? Maybe you think $6600 is outrageous.

Well…. how long have you been in debt so far? How much have you already paid in interest? How much more do you think you’re going to pay if you keep doing things the way you’re doing them?

Really… how’s that going for you? Is it going well? Is it going crap? You decide.

So. Let’s talk instead about how this new plan is going to work for you.

First of all, by paying only the minimum payments, then you free up the money you were otherwise using to pay down your credit cards. If you’re smart, you’ll SAVE some of that money. Since you were already using it to pay down bills, then the money was already gone. Right?

Well, let’s make it gone in a way that actually serves you.

You make it gone, by putting some of it in a savings account where you LEAVE IT, and some of it in a jar on your kitchen windowsill.

So if you were paying $500 each month on a group of credit card bills that added up to a minimum of $200, now let’s instead pay $200 on the cards, put $200 in the bank, and $100 in your jar ($200+$200+$100=$500).

The $100 you get to spend on things that give you some joy, like maybe a latte or a magazine or something that makes you feel good, but also alleviates any feelings of deprivation that might otherwise crop up if you left nothing to have any fun with. Remember, right now the only fun you’re having is by charging again on your credit cards – thereby wiping out any traction you were getting by paying more than the minimum payment – since you have no cash left to buy it outright. So with our new plan, we have to leave some for fun, because history has told us already that it’s a necessary expense. Just not a greater expense than the cash that you’ve (now) got.

(oh, by the way, you have to either cut up your cards, or hide them. No more carrying them around in your wallet. They can NOT be accessible to you. But don’t close the accounts)

The other $200 you leave in the bank for emergencies. Like new spark plugs or when you need the plumber to come fix the toilet.

You have money. How long has it been since that happened?

After three months, you’ve got $600 saved in your account that you definitely wouldn’t have had if you’d kept using that extra money to pay down bills, and your credit card balances are still going down. Maybe by only $30, but they’re going down, none the same.

Forget about them. You’ll always have bills, so just put them on autopay and forget about them. They’re getting paid, the balances are going down, and that’s all that really matters. Don’t spend any more of your energy or money on them. Let them be. Freeeeeee yourself!

And, remember, you’ve also had $300 to spend on whatever gives you pleasure, just to maintain your sanity. ALL WITHOUT RE-CHARGING ON YOUR CREDIT CARDS.

The coup de grace? Your credit card balances aren’t going back up anymore since you’re not charging on them again. They’re just going DOWN. Not bad, eh?

Over time, you’ll see your savings account go up, and your credit card balances go down. I can’t EXPRESS how wonderful this feels (I’ve been there!). And those feelings are POWERFUL.

Don’t underestimate the power of visible progress. Especially since you haven’t seen any thus far. 😉

And if an emergency does come up that costs a couple of hundred bucks? You get to pay for it in CASH. Because now, you have it. Whoo hoo!

I know, I know, not everyone pays a lot more than the minimum payment.

I’m sure there are plenty of you out there who don’t pay $500 down each month on a $200 minimum payment. What if you can only pay $205 on your $200 payment? Then instead of paying that extra $5 to your credit card, you put $4 in the bank, and $1 in your kitchen jar.

I know it’s not much, but it’s something. You are not going to have emergencies EVERY MONTH. But for every month that you save your extra money, that’s another month towards having cash to pay for the emergency instead of having to charge it on your credit card again. That $5 is going to do a lot more for your sanity, and ultimately your overall financial health, than it will for your credit card balance.

It’s all about evaluating the worth of the $5. What’s that saying: a bird in the hand is worth two in the bush? Well, $5 in your savings account is worth A LOT MORE than $5 down on your credit card balance. Save it!

So now that you’ve got your outgoing cash flow under control, let’s have a look at what is happening to your credit card balances, and how you can make them go away even faster.

Let’s say you’ve got a $1500 going on one card at 18% interest, $3500 at 15% on another, and $5000 at 19% on another card. Your grand total is $10,000 (average interest rate is 17.3%). Your minimum on the first card is $30, your second is $70, and the third is $100. So your total in minimum payments is $200. The $3500 balance will be the first one to be paid off in 77 months (6 years, 5 months). I know, it sounds like a long time, but at least it will be PAID OFF.

Remember, ask yourself… how long you’ve been in debt already? Moving on.

Once that one is paid off, you have two choices:

  1. you can start pocketing the $70 minimum payment you were paying on that card, and put it in your bank account for emergencies, and continue paying the other two credit cards off with the remaining $130 per month (of your original $200), you’ll be done after a total of 99 months (8 years, 3 months).
  2. you can keep going by putting that same $70 from that paid off card towards the next expensive card (the 19% interest card) and be no worse off than you were before (meaning, you’re still paying a total of $200 a month, but this time over two cards instead of three). If you continue to pay the $200 per month as you were before, you’ll be done paying off your all of your credit card balances after 90 months (7 years, 6 months). DONE.

By the way, using the example of originally paying $500 a month? Instead, if you had no emergencies and you were saving that $200 a month, by now you would have $15,400 in the bank! WOW! But you will have had some emergencies…

And, unless you had a lot of major emergencies during that time, you will still have a fair bit of savings! And that’s just by saving the same $200 a month you were already blowing on paying down your credit cards! Certainly more than you have now, right?

Credit card bills are no longer controlling your emotions.

The point is, your credit card bills are no longer a big monster hanging over your head. Even with just paying the minimum payments (as long as you don’t re-charge), you can pay it all off without causing you an enormous amount of stress. There is no law that says you have to use every extra penny you ever receive to pay down credit cards. When you do that, it actually causes you more stress, because you don’t leave yourself any money for anything else. And there is ALWAYS something else. And the stress cycle goes on and on and on. With this method, that stress goes away. And if you put the payments on autopay, you don’t even have to think about them anymore. Act as if they don’t even exist.

It’s all about freeing your mind, and saving your sanity.

Furthermore, chances are, you will have had some windfalls during that seven years, and maybe even some income raises. Use your newfound money management tools to sock some of that away. But even if you don’t have any increases, you can see that you can save money, you can have money to spend, and little by little, like eating an elephant, you can still make the debt go away.

And the greater lesson is, you have learned to better manage your money. And that’s worth its weight in gold. Literally.

Now I am aware that this article doesn’t solve all your money problems. It doesn’t address any unforeseen expenses that aren’t already in your household budget. It does assume that all other factors being equal, you can pay down your debt using the money you already have.

This isn’t the be-all and end-all solution. It’s just a start.

Remember, it’s just an article, not a money management plan. In no way is this article a substitute for seeking the advice from a professional money manager.

But this process does work, if you follow it. I’ve even included a downloadable amortization schedule here in which you can input your own credit card data to see how many months it would take you to pay down your own balances with your own information. It really does work! I’ve done it myself.

The rest is up to you!