Oct 24, 2021

Question of the Day: How much will Americans who only make minimum credit card payments end up paying in interest charges this year?

Answer: $935.95

We multiplied the average credit card balance of $5,897 by the average credit card APR of 16.43%. Assuming they don't rack up any more debt, consumers who make 2% minimum payments every month would pay $935.95 in credit card interest that year. 


  • Why do you think that so many Americans have credit card debt, meaning they don’t pay the full balance on their credit card statements every month?
  • How you can avoid getting into credit card debt that carries over from month to month?
  • Imagine using your credit card to buy $100 of clothes. If you weren’t able to pay off that purchase for a year and your credit card had a 20% interest rate, how much would you pay in interest alone? [You would also pay late fees if you made no payments.]

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.


Behind the numbers (Motley Fool):

The math behind credit card interest costs

"We used the following data to calculate how much credit card interest costs Americans:

  • The average credit card balance in 2020 is $5,897, according to average household debt numbers.
  • The average credit card APR is 16.43% as of August 2020, according to the Federal Reserve.

We could just multiply $5,897 by 16.43%. With that method, annual interest charges total $968.88.

However, your credit card balance changes as you make payments. For a more accurate result, we need to factor in how the balance decreases each month.

Minimum payment amounts vary by the card issuer, but they're usually between 1% and 3% of the balance (with a $25 or $35 minimum). We'll split the difference and go with a minimum payment of 2% every month. On a $5,897 balance, that's a payment of about $118 to start.

Assuming they don't rack up any more debt, consumers who make 2% minimum payments every month would pay $935.95 in credit card interest that year."



Help your students avoid those high-interest loans. Let them play loan shark with our Shady Sam game (in the NGPF Arcade) and they will quickly learn the tricks of the trade. 


Attend NGPF Professional Developments and earn Academy Credits on your own time! Check out NGPF On-Demand modules!

About the Author

Mason Butts

After graduating from UCLA with a Master's in Education, Mason spent 5 years as a science educator in a South Los Angeles public high school. He is committed to supporting the holistic growth of all students and empowering them to live a life of relational, academic, and financial success. Now settled in the Bay Area, Mason enjoys facilitating professional developments and partnering with educators as they prepare students for a bright financial future. When Mason is not building curriculum or planning a training, he can be found cycling, trying new foods, and exploring the outdoors.

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