Beware of the minimum payment trap

Caution: If you borrow £3,500 at 21, you’ll be almost 50 years old by the time you clear that debt. Just making a minimum repayment on your debt could keep you in debt for years.

This is because you have been caught in the minimum repayment trap.

What is the minimum repayment and where can you find it on your credit card statement?

This is the minimum amount that you would need to pay each month so that you can avoid additional fees, charges or interest that affect your credit score. It is calculated based on your card balance, so it will go up and down depending on the total amount you owe.

Look for a ‘Summary Box’ on your credit card statement which should contain the minimum repayment for your card. It usually looks something like “Greatest of 1% of balance plus interest, 2.25% of the balance or £5”.

Failure to pay on time usually results in a fee and, worse, a missed payment marker is added to your credit report, which can damage your score and ability to get future credit.

What is the minimum payment trap?

If you have kept up with all your monthly payments and even stopped purchasing with that card but it seems as though the debt isn’t getting paid off, you may have been caught in the minimum payment trap.

The minimum payment is usually 2–5% of the balance due. Paying only this amount stretches repayment over many months or years while interest (often 18%–20% or more) continues to add up.

Here is an example of a minimum payment versus an extra £15 payment.

You want to buy a sofa that costs £850. You use your credit card where the annual interest rate is 20%. Your minimum payment plan is £15 each month and 3% of the outstanding balance.

See the table below to show the difference between the two options (the minimum payment plan versus the £15 payment.

If you pay an extra £15 each month or £30 total, you would have saved:

Interest: £558 – £273 = £285

Total debt: £1,408 – £1,123 = £285

How much quicker would you have paid off your total debt? 3 years 8 months

Tip: You can use tools such as the MoneySavingExpert minimum payment calculator to see how you would need to pay back using a minimum repayment plan.

How to avoid the minimum payment trap

Make a fixed repayment based on what you can afford rather than allowing the repayment to decrease each month.

Pay off as much of the debt as you can. The quicker you pay off your balance, the less you spend on interest.

If you have multiple cards and loans, always pay off the most expensive ones. If you have a good credit score, why not consolidate all your debts into one loan and repay that?

If you are still having issues with debt,  some of the services that you can turn to include Money Advice ServiceDebt Advisor ServiceStep ChangeCitizens Advice Bureau to name but a few.

How to spot and protect yourself from scams

It can be a challenge to know whether something is genuine or fake. If you are ever in doubt, don’t feel obliged to share your personal or bank details. It’s okay to reject, refuse or ignore requests.

With the cost of living on the rise and people eager to save money or make a bit extra, some offers may look like they’re too good to be true.

Use the four steps to stay ahead of the scammers:

1. Does the offer too good to be true?

If you haven’t entered a competition, how can you win?

If the price is too good to be true, it probably is.

2. Were you contacted out of the blue?

Be suspicious if you have been contacted out of the blue and asked for personal or payment details. Genuine organisations are unlikely to contact you and ask for these details. They would usually pre-warn you.

3. Asked for personal details?

Have you been asked to give personal details to an unknown source via online, phone, text, email, post or doorstep?

Scammers create a sense of urgency and pressurise your to provide your details to make a decision. Do not feel pressured to respond.

4. Were you requested for money?

Be wary if you are contacted out of the blue and asked to make a payment of any kind.

Spotting a scam and how to protect yourself from it:

Email or text scams

Phishing emails or text messages are used by scammers to get your personal details. The email might ask you to click on a link to a website. The email address and content can look genuine.

To protect yourself from this type of scam:

  • Never reply by giving out any of your bank details
  • Look out for typos and grammar mistakes as this is a sign of a scam
  • Check if the greeting is personalised i.e. includes your name.
  • Do not click on links in an email or text message if you are suspicious of the sender.

Phone scams

Fraudsters act as cold-callers and make you believe that you are speaking to a member of staff from a trusted organisation. They will try and persuade you into thinking that you have been a victim of fraud and ask you to share personal or bank details.

They also ‘number spoof’ i.e. show the caller display on your phone to show an official telephone number that will make you think that it’s from an actual organisation such as your bank, utility company or HMRC.

Protect yourself from this type of scam:

  • Never give out your personal and banking information. If you are in doubt, hang up and call the organisation directly using the contact details on their website.
  • If possible, call the organisation from a different telephone as scammers can sometimes stay on the line without you knowing.
  • If it is not possible, wait for a short while before returning the call.

Online scams

This includes romance scams, holiday scams, ticketing scams and copycat websites. Scammers use online marketplaces and social media to sell you fake goods or goods that don’t exist.

You can protect yourself from this scam by:

  • Checking the website domain (web address). Most shopping websites end with ‘’ or ‘.com’. Official UK Government or public body websites end with ‘’ and ‘’
  • Check that the web address has HTTPS with a padlock icon. The ‘s’ stands for secure and together with the padlock are an indication the website is safe.
  • Never use public Wi-Fi to access your personal information. This is an easy way for scammers to get your information.
  • If you are buying goods from a website that you have never used before, read reviews of items and previous customer feedback.
  • Never make payment for goods by bank transfer. When paying by credit or debit card you have some rights to get your money back.

What should I do next?

You should report any suspicions of fraud to Action Fraud either via their website or phoning 0300 123 2040.

Action Fraud provides a fraud-reporting and advice centre, where people and small businesses can report fraud, attempted fraud and scam emails.

You can help to stop scammers by warning your friends and family, and by making Action Fraud aware of any scams that you have encountered.


Government official website

Consumer Council

Consumer Fraud Reporting

Get Safe Online

Action Fraud