When you receive your credit card statement in the mail, it will be filled with many different numbers. Of all of the information you see on your statement, one of the most important numbers will be your credit card minimum payment amount. Learn why credit card minimum payments are important below.

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What Is the Credit Card Minimum Payment Amount?

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 APR. The smallest amount of money that you must pay each month is the minimum payment.

Your minimum payment could be calculated in several different ways.

If you call your card issuer, log in to your account, or use its mobile app, you can learn what your “current balance” is. Your current balance is an up-to-date figure that represents the total amount of outstanding charges and fees, taking into account any payments that have been received.

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.

Why Make the Minimum Payment on a Credit Card?

Thankfully, credit card terms are very 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.

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What Happens If I Miss a Credit Card Payment?

When you fail to pay at least the minimum amount, or miss a payment entirely, there are several negative consequences. First, you may be liable for the payment of a late fee of up to $37. 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.

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.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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