Credit card minimum payment: what happens to the rest and how each country regulates it

What is a credit card minimum payment?

It's the smallest amount your card issuer asks for each cycle so your account counts as current. That's how Mexico's central bank, Banco de México, defines it, and it's why paying it by the due date spares you the worst of being late: in Mexico, the financial consumer agency Condusef explains that the minimum keeps you from late fees and default interest.

What the minimum doesn't do is pay off what you bought. It's only a slice of your debt, set so you don't fall behind. If you want your purchases to cost you no interest, the number that matters is a different one: the full statement balance, which in Mexico appears as the payment to avoid interest and which we explain in our post on the statement closing date and the due date.

Sources for this part:Banco de México, CONDUSEF (México)

What happens if I only pay the minimum?

Two things happen at once. The good one: your card stays current, so you're not late; in Mexico, Condusef points out that covering the minimum keeps your credit history healthy. The costly one: everything you didn't pay stays as debt and is charged interest at your card's regular rate, which shows up on your next statement.

Because the minimum is small, a big share of what you pay goes to interest and only part of it reduces what you owe. In the United States, the Consumer Financial Protection Bureau (CFPB) adds that if you don't pay in full you lose your grace period: you're charged interest on what's left and also on new purchases, from the day you make each one.

And if you keep using the card while paying the minimum, your debt can stay the same or grow. That's why Condusef says the minimum should be the exception, for an emergency, not the way you pay every month.

Sources for this part:CONDUSEF (México), CONDUSEF (México), Consumer Financial Protection Bureau (Estados Unidos), CONDUSEF (México)

Example: a year of minimum payments in Mexico

This is just an example with round numbers. Say you owe 1,000 pesos on a card with a 2,000 limit, you're charged 3% of what you owe in interest each month, with no VAT or fees, and you make no new purchases. Under Banco de México's formula, the first month's minimum is the greater of two amounts: 1.5% of the balance plus the cycle's interest, that is 15 + 30 = 45 pesos, or 1.25% of the limit, 25 pesos. You pay 45, but only 15 reduces your debt: the other 30 is interest.

If you pay only the minimum every month, which shrinks a little as your balance does, after twelve months you'll have paid about 498 pesos and still owe about 834: around 332 went to interest. That's why Banco de México set a minimum that makes you pay down some of the debt every cycle. Condusef explains that without that rule, a debt could take many years to pay off and cost 4 or 5 times the starting balance.

Sources for this part:Banco de México, CONDUSEF (México)

How does each country regulate the minimum payment?

In Mexico, Banco de México's rules set the minimum for banks and for other card issuers: the greater of 1.5% of the revolving balance plus the cycle's interest and its VAT, or 1.25% of the credit limit. Your bank can ask for more, never less. And if you pay more than the minimum and your card has balances at different rates, the extra goes first to the one with the highest rate.

In the United States, the rule is about what your statement must warn you. Under Regulation Z, it carries a Minimum Payment Warning: if you make only the minimum payment, you will pay more in interest and it will take you longer. It must also show how long it would take to pay off your current balance and the total you'd pay making only minimum payments, and, in most cases, what you'd need to pay each month to finish in 36 months. The CFPB notes you don't have to pay more than the minimum, but paying only that could take years.

In Brazil, what you must pay by the due date is the minimum your contract sets for the cycle's purchases, plus whatever you carried on revolving credit, the rotativo, with its charges, plus any instalments of a payment plan. The bank must give you at least 30 days' notice before setting or changing that minimum. Whatever you don't pay can only stay on the rotativo until the next bill's due date; after that, it can move to an instalment plan, always on better terms than the rotativo's. And under Law 14,690 of 2023, for credit taken out since early 2024, total interest and charges on the rotativo and on instalment plans for the bill can't exceed the original debt.

In Colombia, the Financial Superintendency certifies each month the current banking interest rate, the basis for the maximum interest you can be charged and for the criminal rule on usury. That cap covers credit cards, which Colombian rules classify as consumer credit. The Superintendency also reminds borrowers that paying late brings default interest and can lead to a report to the credit bureaus.

In Spain, for revolving cards, the Banco de España explains that your lender must tell you at least every quarter when you're expected to finish paying and the total you'll pay if you don't use the card again or change the payment. And if your payment isn't enough to pay off at least 25% of the limit in a year, Spain's banking transparency order also requires your lender to show when you'd finish and how much you'd pay if you raised it by 20%, 50% or 100%.

Sources for this part:Banco de México, Banco de México, Consumer Financial Protection Bureau (Estados Unidos), Consumer Financial Protection Bureau (Estados Unidos), Banco Central do Brasil, Banco Central do Brasil, Banco Central do Brasil, Superintendencia Financiera de Colombia, Función Pública, Gestor Normativo (Colombia), Superintendencia Financiera de Colombia, Banco de España, Portal del Cliente Bancario, Agencia Estatal Boletín Oficial del Estado (España)

How to stop paying only the minimum: snowball or avalanche

Start by paying more than the minimum, even if you can't pay it all: whatever you pay on top reduces what you owe, and next cycle the interest is worked out on a smaller balance. In Mexico and the United States, that extra goes first to the part of your balance with the highest rate. Meanwhile, give the card a rest so you don't add new debt.

If you have several debts, there are two well-known methods, and the CFPB compares them like this. With the avalanche, which the CFPB calls the highest interest rate method, you pay off the debt with the highest rate first, and in the long run it can save you money. With the snowball, the one Dave Ramsey sets out in The Total Money Makeover, you pay off the smallest debt first and, once it's gone, add that payment to the next one: you see progress fast and that keeps you going, but you may pay more interest overall.

With either method, keep paying at least the minimum on your other debts so none of them goes late. Be honest with yourself: if motivation is what holds you back, the snowball helps you stick with it; if you can stay the course, the avalanche costs less.

Sources for this part:Banco de México, Consumer Financial Protection Bureau (Estados Unidos), Consumer Financial Protection Bureau (Estados Unidos), The Total Money Makeover

How to do it in Oslo

In Oslo, go to Money and, under Debts, tap “Add a debt or a card”. Choose “Card”, answer “How much do you owe today?” and enter your “Cut-off day”, your “Payment day” and the “Interest rate”, “Monthly” or “Yearly”, just as it appears on your statement. With each debt's rate in view, you can tell which one costs you the most, which is where the avalanche starts.

When your statement arrives, open your card, tap “Add the real amount from your statement” and enter what you'll pay: the full balance, the minimum or something in between. Then tap “Match my statement” and answer “How much do you owe in total?”: if it's more than Oslo had, it shows you the difference and, if you choose “Interest or charges”, adds it to your debt without counting it as spending; when you pay it, it shows up under “Debt payments”. That way you see what paying only the minimum costs you.

Each time you pay, tap “Log a payment”: the debt's bar shows how much of what you owed you've already paid. Oslo reminds you two days before your payment day, and you can turn those reminders on or off in More, Settings, Notifications, “Payments and due dates”. On the free plan you can track up to three debts, and each card counts as one.