Minimum payments are one of the most misunderstood parts of credit card use. When your bill arrives, you’re given the option to pay the full balance or a smaller minimum amount, usually calculated as a percentage of your balance (such as 1–3%), plus interest and fees. While paying the minimum keeps your account in good standing and avoids late fees, it means most of your balance carries over, generating interest charges. This practice can lead to long repayment timelines and much higher total costs. For example, carrying a $3,000 balance with a 20% APR and paying only the minimum might take over a decade to pay off. Credit card issuers benefit from this because it maximizes interest income, but for consumers it’s a debt trap if not managed carefully. The smartest move is usually to pay more than the minimum — ideally the full balance each month.