What is a credit card minimum repayment

Canstar explains how minimum repayments on credit cards work – and how much your debt might cost by the time you pay it off

There are around 16.7 million credit cards currently issued in Australia; it’s fair to say that having a credit card is both common and popular. And why not? They’re a useful piece of plastic that enables you to buy things that you want right now, and to pay off the debt later. In fact you can pay that debt off much later if you want to, as long as you meet the minimum repayment each month.

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What is a credit card minimum repayment?

The minimum repayment is the lowest amount a user has to pay to meet the credit card debt servicing requirement. This doesn?t place a restriction on how much they can pay above this amount. Most financial institutions will set a minimum repayment about of around 2.5%% – 3% of the outstanding balance.



Canstar research shows that the current repayment structures in a majority of Australian credit cards will cover the interest costs, ongoing fees and a reduction in the amount owing. This ensures any debit is not compounded i.e. the user is not going backwards.

If I make minimum repayments, how much will my credit card debt cost?

Making minimum credit card repayments might seem easy – but it’s useful to know how much you debt might cost over time if that’s all you do.

In the example below we have calculated the total potential cost over time of making a minimum credit card payment of 2.5% or $20 (whichever is greater)  on an outstanding debt that is incurring interest at a rate of 17%.

Amount owing % rate Time to pay off debt Total potential cost
$2,000 17% 11 years, 9 months $3,908
$5,000 17% 18 years, 7 months $10,707
$7,000 17% 21 years, 1 month $15,240
$10,000 17% 23 years, 8 months $23,038
$15,000 17% 26 years, 8 months $33,370

Source: Canstar. Calculations are a general guide only and not advice.

That’s a lot of money!

Apart from cutting up the credit card the next best option is to pick the right credit card for your needs. We’ve already done the work for you. Find which credit card might suit your spending habit.

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