1. What is the UK Minimum Credit Card Payment?

In the UK, credit card companies must require a minimum payment each month, typically the greater of: 1% of the outstanding balance plus interest charges, or a fixed amount (usually £5-£25). This ensures borrowers make regular payments toward their debt.

2. How Does the Calculator Work?

The calculator uses the standard UK minimum payment formula:

Where:

• \( Balance \) — Current outstanding credit card balance
• \( Interest \) — Monthly interest charges
• \( Fixed\ Amount \) — Card issuer's minimum fixed payment (e.g., £5)

Explanation: The calculation ensures you pay at least 1% of principal plus all interest, or the fixed minimum - whichever is higher.

3. Importance of Minimum Payments

Details: While minimum payments keep your account in good standing, paying only the minimum extends repayment time and increases total interest paid. Understanding your minimum helps budget monthly expenses.

4. Using the Calculator

Tips: Enter your current balance, expected monthly interest, and your card's fixed minimum amount (check your card terms). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why do UK credit cards use this formula?
A: The formula balances lender protection with borrower affordability, ensuring steady debt reduction while preventing unmanageable payments.

Q2: Can the minimum payment change?
A: Yes, as your balance changes, so will the 1% portion. Fixed amounts typically remain constant unless your card terms change.

Q3: Is paying just the minimum a good idea?
A: No. Minimum payments mainly cover interest. To reduce debt faster, pay more than the minimum whenever possible.

Q4: How is monthly interest calculated?
A: Interest is typically (APR/365) × daily balance × days in month. Check your statement for exact calculation.

Q5: Do all UK cards use this formula?
A: Most do, but check your terms - some may use slightly different percentages (e.g., 2%) or calculation methods.