Why is paying only the minimum on a credit card such a trap?

The minimum payment is designed to keep you in debt as long as possible. It's usually just 1–3% of the balance plus interest, so most of it goes to interest while the principal barely moves. On a $5,000 balance at 24% APR, paying the minimum can take well over a decade and cost you thousands in interest – often more than the original balance. Because credit card interest compounds, each month you carry a balance, you pay interest on previous interest, and the hole deepens. The fix is to pay a fixed dollar amount far above the minimum, ideally the largest you can sustain, and to stop adding new charges. Even an extra $100 a month dramatically shortens the timeline. See how much faster you finish at wealthserene.com/tools/debt-payoff by entering a higher monthly payment.