Core answer: The minimum payment looks like relief but is actually an ~18.25% APR loan: every purchase in the statement month loses its interest-free period and accrues interest at 0.05% per day on the FULL balance from the posting date, compounding monthly. Paying only the minimum on ¥10,000 takes about 3 years to clear and costs over ¥3,000 in interest.
What the minimum payment is
After the statement posts, the bank lets you pay just a "minimum amount" (usually 10% of the balance plus fees) and rolls the rest forward. Paying it avoids late fees and a delinquency record — its only real advantage.
The cost hides in the fine print:
- Interest-free period voided: every purchase accrues interest from its posting date (not the due date)
- Interest on the full amount: even if you repaid ¥9,900 of ¥10,000, interest runs on the full ¥10,000 until fully cleared
- 0.05% daily: 0.05% × 365 ≈ 18.25% APR, compounded monthly
How the interest is computed
Formula: interest = outstanding principal × 0.05% × days (each purchase tracked from its posting date to payoff)
Example: a ¥10,000 statement, pay the ¥1,000 minimum, the remaining ¥9,000 keeps accruing daily; next month the interest itself joins the principal — compound growth working against you.
The real cost of ¥10,000 on minimums
Balance ¥10,000, paying only the minimum (10% of balance, ≥¥100), no new spending:
| Point | Remaining principal | Cumulative interest paid |
|---|---|---|
| Month 1 | 9,000 | ~150 |
| Month 6 | ~5,600 | ~1,100 |
| Month 12 | ~2,700 | ~2,100 |
| Month 24 | ~400 | ~2,900 |
| Paid off (~month 36) | 0 | ~3,100 |
Interest equals 31% of the original principal. Keep swiping during this period and the debt never ends.
Minimum payment vs installments vs paying in full
| Method | Cost of ¥10,000 over 12 months | Notes |
|---|---|---|
| Pay in full | ¥0 | up to 50+ interest-free days |
| 12-month installment plan | ~¥700–900 | ~0.6%/month fee, ~13% effective APR |
| Rolling minimum payments | ~¥2,100 | ~18.25% APR compounding |
Priority: pay in full > installments > minimum payment. Installments are not cheap either, but cost roughly a third of rolling minimums.
Why "card surfing" is a dead end
Cashing out card A to pay card B, then reversing:
- Each round-trip costs ~0.6%–1% in cash-out fees (7%–12% annualized), stacking on the cards' own interest to exceed 20% total funding cost
- Total debt only grows; the practice violates card agreements — a risk-control limit cut or freeze breaks the chain instantly
- Multiple open credit lines damage future mortgage and auto loan approvals
Escaping the trap
- Stop swiping: cut the cards or freeze the limits — stop the inflow of new debt
- List everything: balance, rate and due date for every card
- Avalanche method: attack the highest-rate card first, minimums on the rest
- Negotiate installments: call the bank and request a statement installment plan or a personalized restructuring (regulations allow negotiated plans up to 5 years)
- Low-rate substitution: replace card debt with a cheaper formal consumer loan (4%–8% APR) in one shot — only valid if you stop swiping, otherwise you end up doubly leveraged
Common mistakes and myths
- "Paying the minimum means no interest" — it only waives late fees and the delinquency record; interest accrues on the full balance.
- "The rate sounds small, I'll take my time" — 0.05% daily is 18.25% APR, six times a mortgage rate and above almost any investment return.
- "A few days late is fine" — delinquencies hit your credit report (some banks allow 1–3 days of grace); three consecutive or six cumulative late payments effectively kill a mortgage application.
- "Closing the card erases the bad record" — negative records persist 5 years after payoff; closing the card erases nothing, while continued clean usage gradually covers old history.
Use the [Credit Card Payoff Calculator](/c/finance/credit-card-payoff) to compare total interest across repayment strategies, and the [Compound Interest Calculator](/c/finance/compound) to feel the destructive power of 18%.