1. What is Minimum Payment on Credit Cards?

The minimum payment is the smallest amount you must pay each month to keep your credit card account in good standing. While paying only the minimum keeps your account current, it results in paying more interest over time.

2. How Minimum Payment is Calculated

The standard formula for minimum payment is:

Where:

• Balance — Your current credit card balance
• Percentage — Typically 1-3% of your balance (varies by issuer)
• Interest — Monthly interest charges
• Fees — Any additional fees for the billing period

Note: Some issuers use a flat dollar amount (e.g., $35) if the calculated minimum is below their threshold.

3. Understanding the Components

Percentage: Most cards use 1-3% of your balance. This is the largest component for most cardholders.
Interest: Calculated based on your APR and average daily balance.
Fees: Includes late fees, annual fees, or other charges applied to your account.

4. Using the Calculator

Tips: Enter your current balance, the card's minimum payment percentage (check your card agreement), monthly interest charges, and any fees. The calculator will show your estimated minimum payment.

5. Frequently Asked Questions (FAQ)

Q1: Is paying only the minimum payment bad?
A: While it keeps your account in good standing, it leads to higher interest costs and longer payoff times. Always pay more than minimum if possible.

Q2: Can the minimum payment percentage change?
A: Yes, card issuers can change terms with notice. Check your card agreement for current terms.

Q3: Why is my minimum payment higher than usual?
A: This could be due to increased balance, higher interest rates, or additional fees on your account.

Q4: What if I can't pay the minimum payment?
A: Contact your issuer immediately. Missing payments hurts your credit score and may trigger penalty APRs.

Q5: How can I reduce my minimum payment?
A: Pay down your balance, request a lower APR, or transfer to a card with lower interest rates.