What is a minimum payment?

Making the most of your monthly credit card payments

When you have a credit card, you’re expected to pay off at least some of your statement balance every month.

The lowest amount you’re allowed to pay is called your minimum payment.

  • This can change from month to month as your statement balance changes.
  • Always pay at least this minimum by your due date, or you could end up paying fees, losing any promotional offers and affecting your credit score.
  • To clear your statement balance sooner and prevent interest from building up, it’s always better to pay more than the minimum if you can.

As a credit card holder, every month you have three options

1. Pay just your minimum payment

If you’re worried about money, paying the minimum can help you budget. You can always make extra payments when you can, and how you pay your credit card is up to you.

2. Pay off more of your balance

Consistently paying a manageable amount above your minimum payment suits a lot of people. You can vary how much extra you pay each month to suit your budget.

3. Pay off all of your balance

By clearing your full statement balance every month, you can often pay no interest – particularly on any card purchases you’ve made.

We don’t recommend making only your minimum payment every month. In fact, we’ll often contact customers who regularly do this to offer some advice and help if needed.

Explore how credit cards work

After 18 months, we might get in touch

By paying the minimum for 18 months, you could end up spending more on interest than clearing your balance. The Financial Conduct Authority calls this persistent debt – and it can be very expensive, as you can see in the example below.

  • If you’re an existing Lloyds Bank credit card customer, we’ll get in touch to help you manage this debt.
  • We’ll usually send you a letter, offering some options and next steps to pay off more of your balance.

Read about persistent debt

Why you should pay more than the minimum

Here’s a simplified example to show you how minimum payments cost more. You have a £3,000 balance on a credit card with an effective interest rate of 24%. Read our guide to interest rates for more detail on how they work.

Make the minimum payment

Starting at £84 and reducing over time.

Time taken to clear balance
28 years and 3 months

Interest paid
£5,214

Total paid
£8,214

It’ll cost you the most

Fix your payment

At £84 per month.

Time taken to clear balance
4 years and 10 months

Interest paid
£1,866

Total paid
£4,866

It’ll cost you less

Increase your payment

To £124 per month.

Time taken to clear balance
2 years and 9 months

Interest paid
£981

Total paid
£3,981

It’ll cost you the least

Repayment calculator

See how your monthly payments impact the time it takes to repay your balance and how you could reduce your interest payable.

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Results

Total interest paid = ##interest##

Total paid = ##total_paid##

Period of time = ##years## year(s) and ##months## months
 

Worried about an upcoming payment?

If you’re having a hard time managing your money, don’t hesitate to get in touch with us. We’ll talk everything through with you, look at your products and services and even help you consider your best options.

Help with money worries

Frequently Asked Questions

  • The most common and safest way to pay every month is with a regular Direct Debit.

    This way, you won’t run the risk of forgetting to make a payment, being charged any late fees or losing a promotional rate. If a Direct Debit isn’t taken for 37 months, it will become inactive, and your bank or building society will remove the details from their systems. If this happens, you’ll need to set up a new one.

    In months when you can afford to pay more than your minimum amount, you can
    also make additional payments online, on the Mobile Banking app or by in-branch bank transfers, cheques or cash.

    Explore ways to pay your credit card

  • All credit card providers calculate minimum payments differently. If you’re a Lloyds Bank customer, in general your minimum payment is either 2.5% of your balance plus any interest and fees or £5 – whichever is higher. Even if you have a 0% promotional offer, you need to make the minimum payment each month.

    Below are two simple examples showing a customer’s minimum payments if they are currently on a promotional offer giving them 0% interest for a 12-month period.

    Example 1
    Let’s say you have a balance of £2,000.

    2.5% of this is £50, so your minimum payment is £50.

    Example 2
    On the other hand, say you only have a balance of £199.

    2.5% of this is £4.98, so your minimum payment this month is £5.

Key points on credit card minimum payments

  • A minimum payment is the lowest amount you’re allowed to pay towards your credit card debt in any given month.
  • This is calculated based on your latest statement balance.
  • If you can, always try to pay more than the minimum amount. Paying more than the minimum each month reduces the interest you’ll pay.
  • If you’re a new Lloyds Bank customer, your minimum payment is either 2.5% of your balance plus any interest and fees or £5 – whichever is higher.
  • Worried about upcoming payments? There is information about money worries on our website that we hope you find useful.

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