Australian credit card minimum repayments are designed to keep you paying — not to help you get out of debt. Set at just 2% of your outstanding balance (or $25, whichever is greater), the minimum shrinks every month as your balance falls, so the debt persists almost indefinitely.
At the typical Australian rate of around 20% p.a., a $5,000 credit card balance paid on minimums alone will take over 30 years to clear — costing more than $7,000 in intereston top of the original debt. That's the interest-only trap in action: monthly interest charges eat nearly all of the minimum payment, leaving almost nothing to reduce the principal.
How this calculator works
The minimum repayment simulationrecalculates each month's payment as 2% of the current balance or $25 — exactly how Australian credit cards work. The fixed repayment simulationholds your payment constant at the first month's minimum plus whatever extra you specify, so more principal is cleared each month as interest charges fall.
The power of paying a little more
The improvement is non-linear. Doubling your minimum payment doesn't halve the payoff time — it cuts it by far more because you're attacking principal faster, which reduces next month's interest, which frees up even more to reduce principal. Even an extra $50 a month on a typical $3,000 balance can cut the payoff time by a decade and save thousands of dollars.
Australian credit card statistics
The RBA estimates there are approximately 13 million credit card accounts in Australia with around $17 billion in balances accruing interest at any given time. The average interest-accruing balance is roughly $2,800 per account. ASIC research consistently finds that around 20% of cardholders pay only the minimum each month — a pattern that keeps millions of Australians in debt for years longer than necessary.