The Complete Guide to UK Credit Card Minimum Payments (2026)
Credit card minimum payments are deliberately designed to keep you in debt for as long as possible, maximising the interest paid to lenders. Understanding how they work — and calculating the true cost — is the first step to escaping the debt trap that affects millions of UK consumers.
How UK Credit Card Interest Is Calculated
UK credit cards charge interest using the Annual Percentage Rate (APR). Interest accrues daily on your outstanding balance. If you pay your full statement balance by the due date each month, you pay no interest (the interest-free grace period, typically 25–56 days). The moment you carry a balance, interest starts accruing from the date of each transaction.
Daily interest rate = APR ÷ 365. On a £3,000 balance at 24.9% APR: daily interest = £3,000 × (24.9/365) ÷ 100 = £2.05/day = £62.25/month. If your minimum payment is £60, only £2.25 of that reduces your actual debt. This is why minimum payments barely make a dent.
UK Credit Card Statistics (2026)
According to the FCA and UK Finance data:
- UK consumers held approximately £69 billion in outstanding credit card balances in 2025.
- The average APR on new credit card purchases reached 24.9% in 2025 — a historic high driven by the cost of living crisis and lender risk repricing.
- Over 4 million UK credit card holders were classified as being in "persistent debt" at peak (paying more in interest than principal over 18 months).
- The average UK credit card balance is approximately £2,300 per cardholder.
- Credit card debt is the second most common form of consumer debt after student loans.
- Around 2.7 million UK adults have missed a credit card payment in the last 12 months.
The True Cost of Minimum Payments: UK Examples
| Balance | APR | Years to Pay Off | Total Interest | Total Paid |
|---|---|---|---|---|
| £1,000 | 24.9% | 13 yrs 8 mo | £962 | £1,962 |
| £2,000 | 24.9% | 19 yrs 2 mo | £2,220 | £4,220 |
| £3,000 | 24.9% | 22 yrs 5 mo | £3,476 | £6,476 |
| £5,000 | 24.9% | 26 yrs 1 mo | £6,249 | £11,249 |
| £10,000 | 24.9% | 30 yrs 9 mo | £13,804 | £23,804 |
Note: Assumes 2% minimum payment (minimum £25), no new spending, and APR remains constant.
FCA Persistent Debt Rules (2021 Update)
The FCA strengthened its persistent debt rules from September 2021. Any customer who has been in persistent debt for 18 months must be contacted by their lender with options to increase payments. At 36 months, lenders must offer affordable repayment plans. If you cannot afford an adequate repayment plan, the lender must suspend your card and freeze interest. This represents a significant consumer protection improvement — but only helps if you engage with your lender rather than ignoring communications.
The Avalanche vs Snowball Method for Multiple Cards
If you have multiple credit cards, two proven strategies exist for becoming debt-free:
Avalanche (mathematically optimal): Pay minimums on all cards. Direct every extra pound to the card with the highest APR. When clear, move to the next highest. Example with three cards (£1,000 at 34.9%, £2,000 at 24.9%, £3,000 at 19.9%): Attack the 34.9% card first. This method minimises total interest paid.
Snowball (psychologically effective): Pay minimums on all cards. Direct every extra pound to the card with the smallest balance. When clear, add that freed payment to attack the next card. Research from the Journal of Marketing Research found debt snowball users pay off more debt than avalanche users — the psychological wins keep motivation high.
Balance Transfer Cards: Escape Route for High-Interest Debt
A 0% balance transfer card is one of the most powerful tools available to UK consumers carrying credit card debt. In 2026, leading UK providers offer 0% periods of up to 30 months. Balance transfer fees typically range from 2–4% (often waivable in promotional periods). On a £3,000 balance with a 0% card and fixed £150/month payment, you would be debt-free in 20 months with zero interest paid — versus 22+ years with minimum payments. Key providers in 2026 include Barclaycard, Tesco Bank, Halifax and Virgin Money.
What UK Debt Charities Advise
If you are struggling with credit card debt:
- StepChange Debt Charity: Free, impartial advice; can arrange Debt Management Plans (DMPs) — 0800 138 1111
- National Debtline: Free advice and sample letters — 0808 808 4000
- Citizens Advice: Local and online help with creditor negotiations
- MoneyHelper: Government-backed guidance (formerly Money Advice Service)
If debts are truly unmanageable, formal options including Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs, for debts under £30,000) and bankruptcy are available through the Insolvency Service. These have serious long-term credit implications but may be appropriate in extreme cases.
Tips for Paying Off Credit Card Debt Faster
- Set up a direct debit for at least 3× the minimum payment every month.
- Use the 0% balance transfer strategy — check eligibility with a soft search first.
- Make a payment immediately after each purchase when possible (reduces daily interest accrual).
- Put any windfalls (tax refunds, bonuses, cashback) directly onto credit card balance.
- Stop using the card for new purchases until the balance is cleared.
- Contact your lender to request a rate reduction — many will agree if you have been a good customer.
- Consider a personal loan at a lower APR to consolidate credit card debt — compare total cost carefully.