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What Is the Minimum Payment on My Credit Card?

Last Updated: June 1, 2022
3 min read

Let’s Learn About: Minimum Credit Card Payments

  1. The minimum payment due for your credit card bill is usually based on a certain percentage of your account balance.

  2. Missing payments or making late payments may have a negative impact on your credit score.

  3. Setting up yet or email alerts, or checking your credit card statement regularly, are effective ways to manage your credit card payments.

The minimum payment on your credit card statement is the smallest dollar amount you must pay in a given month. However, keep in mind, that if you only pay the minimum, you will carry a revolving balance and you will owe interest on that amount.

The credit card statement you receive each month is filled with information, and a number you’ll likely want to pay special attention to is your minimum payment. So, what is your minimum payment? Your minimum payment is the smallest amount of money that you must pay each month to keep your account in good standing.

Understanding your minimum payment

Your credit card represents a line of credit that has been extended to you. And when you make a charge, you are receiving a loan. When you opened your credit card account, you agreed to the payment terms of this loan. One of those terms is that you have to pay back the loan at the applicable annual percentage rate (APR). The smallest amount of money that you are required to pay each month is the minimum payment.

Your minimum payment could be calculated in several different ways and can vary from card to card. Consult your credit card statement and the terms of your account to understand exactly how your particular minimum payment is calculated.

The importance of making the minimum payment

Thankfully, credit card terms can be flexible, and only require you to make a payment of at least the minimum payment each month, on or before the payment due date. So long as you make at least the minimum payment on time each month, your account is considered current.

Most credit cards allow you to avoid interest charges on purchases by paying your entire statement balance in full and on time each month.

What if I miss a payment?

When you fail to pay at least the minimum amount, or miss a payment entirely, there are several negative consequences depending on the type of late payment. First, you may be liable for the payment of a late fee. In addition, many credit card issuers will impose a higher, penalty interest rate.

When you miss a payment, you will also continue to incur interest on your average daily balance, which will be higher than it would have been if you had made the minimum payment. Additionally, your late payment may be reported to the consumer credit bureaus, which could hurt your credit history and lower your credit score.

Fortunately, there are several ways that you can avoid making late payments. You can configure email and text alerts to notify you when your payment is due. You also can create automatic payments to ensure that you always pay at least the minimum amount, and that your payment is received on time.

What other information will I see on my statement?

The minimum payment amount is different from other amounts that will appear on your paper or digital statements. For instance, your statement will include a “statement balance,” which is the total amount of outstanding charges and fees on your account at the time your statement cycle closed. It will not represent any charges or fees on your account, or payments made, since the statement period ended.

Your credit card statement will also include a required minimum payments disclosure if you carry a balance each month. This table will show you how long it will take you to pay off your entire statement balance if you make only the minimum payment due and no additional transactions are made on the card during this time.

By understanding what the minimum payment is, and how it works, you can make sure to manage your credit card account as responsibly as possible.

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