Miniumum Payments - Americor

Miniumum Payments

The Minimum Payments Strategy

Making only the minimum payments on a credit card account each month is the least effective strategy to reduce debt in the short term. While staying current with credit card payments may preserve a fair to good credit score in the short term, chances are, the credit card account balances will continue to rise each month and little if any progress will be made toward reducing the amounts owed. As an example, a credit card balance of $30,000 with a 15% interest rate will take almost 40 years to pay off and in addition to the principal amount being paid back, the cardholder will also pay back over $46,000 in interest charges as well.

The minimum payments strategy is a losing strategy for anyone wanting to reduce their debt and move on with their life. While it may preserve a fair to good credit score in the short term, this strategy is taking money out of the budget each month to save for a new home or automobile, emergencies, retirement, and college tuition not to mention just being able to live a more comfortable, stress free life.

The minimum payments strategy should only be used for a short time, during a period of reduced or lost income. Making only the minimum payments on credit card accounts each month is a sure way to stay in debt and remain hostage to the credit card companies for decades.

Here are some Pros and Cons to consider about the Minimum Payments Strategy:


  • Preserves a good credit score by maintaining a current payment history
  • Preserves credit lines where borrowers may need credit cards for business travel
  • Maintains Length of credit history which preserves credit score


  • Balances will not decrease very much and it could take decades to pay off balances
  • High interest charges stress monthly household budgets and reduce the ability to save
  • Over time, interest payments will likely exceed the principal balance repaid on the accounts