THE25Finances · Lesson 09All lessons ↗
A self-possessed adult woman in a clean, high-end editorial setting for The Minimum-Payment Trap.
09 / 25 · The Minimum-Payment Trap

She knows the minimum is not always the finish line. It can be the long way around.

On a high-rate balance, a modest sustainable extra payment can change both the payoff date and the interest total.

The lesson

€50 more a month can remove 47 months.

With a €5,000 balance at a fixed 18% annual rate, paying €100 each month takes ninety-four months in this simplified illustration and costs €4,311 in interest.

Paying €150 each month takes forty-seven months and costs €1,984 in interest. The €50 gap saves €2,327 because it removes future months in which interest would have continued to accrue.

Your contract is the source of truth. Real minimum payments, fees, rates and new charges can change the result substantially.

94MONTHS AT €100
47MONTHS AT €150
€2,327INTEREST SAVED

Test the payoff path

Change the payment. Watch the curve move.

A fixed-rate illustration. It is not a replacement for your loan statement or a debt adviser.

See the curve

The balance falls much
faster when the payment moves.

Balance remaining under two fixed-payment illustrations. Both begin at €5,000.

€100/month€150/month
Months to repay
Total interest
Total paid

Continue with any AI assistant

Compare debt-payment scenarios

Help me compare repayment scenarios for a debt. Ask for the current balance, APR, payment rules, fees and a safe extra amount. Show payoff time and total interest under each scenario. Include a note to check the actual agreement and seek qualified debt help if needed.

Assumptions

  • The annual rate is divided by 12 and held fixed.
  • Payments are made monthly; fees, missed payments and new borrowing are excluded.
  • Check the actual contract and seek qualified local help if repayment is difficult.
Lesson completeReturn to the library ↗