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The minimum payment trap: 96% underestimate impact

The minimum payment trap: 96% underestimate impact

96% of UK adults grossly underestimate the impact of making the minimum payment, when playing off credit card debt, a new survey revealed.

The study by asked ‘how long would it take to clear £2,000 in credit card debt if you just pay the minimum each month’,£5,  and 96% said it would be paid off in 25 years or less.

In reality it would take over 34 years to clear the debt and answer given by just 1% of respondents with 2% of respondents coming close to the correct answer.
Alastair Douglas, CEO of, said the worrying thing about the result was the degree to which UK adults underestimated the impact of managing their credit card debt that way.

“These findings are particularly concerning given how respondents said they typically manage their credit card debt,” said Alastair.

“Over one in ten (11%) admitted to just making the minimum payment each month. Still more worryingly, the minimum payment option is much more popular amongst younger people: 29% of 18-24 year olds and 21% of 25-34 year olds said that they just make the minimum payment each month.

“Moreover, it appears that there’s significant confusion around what making the minimum payment actually means. When those respondents who said they make the minimum payment each month were asked why they chose that option, 33% said they did so to avoid paying interest, and 18% said they thought it was the cheapest way to clear their debts.”

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