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At a glance:
Paying only the minimum balance on your credit card might feel manageable, but it can keep you trapped in debt for years:
- Most of your payment goes to interest, not the actual debt
- A R10 000 balance at 20% interest can take nearly 8 years to repay
- You could pay almost R9 000 extra in interest over that time
- Paying a bit more each month saves thousands and years of stress
- Small changes now can fast-track your path to financial freedom
How the minimum payment trap works
The facts: When you use your credit card, you’re borrowing money from your bank. If you don’t pay back the full amount by the due date, the bank starts charging interest on whatever you still owe. In South Africa, most banks calculate your minimum payment as a small percentage of your total balance – often around 3% to 5%, depending on the provider – plus any fees or interest for that month.
The trap: The problem is that this minimum payment usually just covers the interest and a small portion of the actual debt (called the principal amount). So, paying only the minimum keeps your account in good standing, yes, but it barely makes a dent in your balance. The rest keeps earning interest month after month, and before you know it, your debt starts working harder than you do.
This is called the minimum payment trap, and once you’re in it, it can be difficult to get out.
A real-life example: the R10 000 trap
Let’s say you owe R10 000 on your credit card at an interest rate of 20% a year. If you only pay the minimum 3% of your balance each month here’s roughly what happens:
- Your first minimum payment is R300 (3% of R10 000).
- Out of that, around R167 goes towards interest, and you’ll likely also have an additional monthly service fee (about R60) and credit life insurance (around R70) added on top.
- So even though you’re paying R300, roughly two-thirds of that amount covers fees and interest – and only a small portion actually reduces your debt.
- The next month, your balance drops only slightly to around R9 867, and then starts earning interest again.
If you kept this up, it would take you around eight years to pay off that R10 000 and you’d end up paying close to another R9 000 in interest and fees along the way.
That means you’d spend nearly double what you borrowed, all because the minimum payment made the debt look manageable.
(Note: Figures are estimates based on a 20% annual interest rate, monthly compounding and no new spending. Actual results vary by bank and repayment behaviour)
Getting out of the trap – small changes make a big difference
If you’ve been stuck in the minimum payment cycle, here’s the good news: you don’t need to pay off your entire balance overnight to start winning. Every extra rand you pay above the minimum shortens the time you’re in debt and shrinks the total interest you’ll owe. Your golden rule is to always pay more than the minimum.
For example, let’s say you have that same R10 000 debt and decide to pay R200 more each month. So instead of the R300 minimum, you pay R500. That small bump makes a big difference – you’d clear your balance in just over two years instead of eight, and pay about R4 000 in interest instead of nearly R9 000. By paying off more of the principal each month, you shrink the amount the bank can charge interest on, which means every payment works harder for you.
Be sure to prioritise high-interest debts first. So, if you have several debts, list them by interest rate and tackle the most expensive one first. This strategy, often called the avalanche method, saves you money in the long run.
Lastly, avoid new credit while paying off old debt. It’s tempting to swipe again once you’ve made a payment, but that keeps you trapped. Try to use your card only for expenses you can repay in full each month.
Remember, you can get help if you’re struggling. If your debt feels overwhelming, a financial adviser or debt counsellor can help you build a plan. The sooner you act, the easier it becomes to turn things around.
Debt grows quietly, but so does financial progress. The difference is direction – one keeps you trapped, the other moves you forward.
Your money, your move
Paying the minimum is like running on a treadmill. You’re putting in effort but staying in the same place. Paying a little extra each month is like stepping off and finally walking towards your goals.
When you think of your future self – the one who wants options, security, and less financial stress – imagine what it would feel like to have no card bills hanging over your head. That’s what paying more than the minimum buys you: freedom.
It’s not about punishing yourself or cutting out all discretionary spending. It’s about choosing where your money goes.
Ready to ditch debt for good?
The Truth About Money’s Ditching Debt Course can help you take control of your finances, one decision at a time. Learn practical ways to manage repayments, understand interest, and start building a debt-free future.
Every time you choose to pay more than the minimum, you’re not just reducing your balance – you’re reclaiming your freedom.