Information Needed

• Because each credit card company sets its own minimum payment formula, gather some information before making your calculations. Your credit card agreement should describe the minimum payment calculation type. Generally, it will be a flat percentage of the balance, usually around 4 percent, or a smaller percentage of the balance plus fees and finance charges. The card may also have a flat amount that acts as the minimum payment when the balance is especially small. Call your credit card company if you cannot find these formulas. You also need your account's annual percentage rate, or APR, and current balance for the calculations.
  
  

OCC Formula

• The formula recommended by the U.S. Office of the Comptroller for the Currency is 1 percent of the balance plus finance charges and fees. This formula ensures that the cardholder will reduce the balance owed by at least 1 percent each month, regardless of how high the fees and finance charges are. Multiply the balance on the credit card by 0.01 to find 1 percent of the balance. For example, $5,000 times 0.01 is $50. Multiply the balance by one-twelfth of the APR to find the finance charges. For example, if the APR is 15 percent, or 0.15, divide by 12 to get 0.0125, and multiply that by $5,000 to get $62.50. This means a minimum payment of $112.50, plus any fees, such as balance transfer fees or late payment fees.
  
  

Percentage of Balance

• If the minimum payment is a percentage of the balance, multiply the percent figure by the balance to find the payment amount. First convert the minimum payment percent to a decimal by moving the decimal point two spaces left. For example, 4 percent becomes 0.04. When you multiply this by a $5,000 balance, you get a minimum payment amount of $200.
  
  

Considerations

• Consumers can take years to pay off their credit cards when making only the minimum payment. In addition, they spend thousands of dollars in interest charges over that time. This is because much of the payment goes toward paying the interest accrued and little pays down the balance. Paying more than the minimum payment every month is more financially advantageous. Credit card statements show the amount that would need to be paid each month to pay off the current balance within three years. This number is a good starting point for people looking to get out of debt.