What is a Minimum Payment?

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credit card minimum paymentMany of you have probably noticed that the little section on your credit card bill that reads “Minimum Payment” is considerably lower than your entire bill. The convenience of owning a credit card is having the option of putting off a bill, like a loan, and paying it later. You still have to pay something every month if you want to avoid any penalty fees, though. That is where the minimum payment comes in — the lowest amount of money that you are required to pay on your credit card statement each month.

Credit card companies are required to set the minimum fee so it is possible to bring your balance down, provided you don’t charge anything extra to your balance.

Minimum Fee Calculation

Every credit card company will stipulate their minimum payment calculations in the agreement you initially sign. This will either be a flat fee, or it will be a percentage of your outstanding balance.

If your minimum payment is based on a percentage of your balance, it could be anywhere between 1% and 5% on average. If it is calculated based on a flat fee, it is all fees and interest due that month, plus 1 percent of the principal amount owed. Again, this will be specified in the terms you initially agreed to when you signed up with your credit card.

Pitfalls

Paying the minimum on occasion is not a bad thing. However, it can be a dangerous habit to get into. With the interest accrued on your balance the next month, as well as the additional charges added with your next month’s statement, your balance will continue to grow. Becoming dependent on those minimum payments will not lessen your balance if you continue adding charges to your account. This is how many people fall into debt.

Failure to pay at least the minimum payment will not only bring on penalty fees, but it can also damage your credit rating, and in worse cases, cause the credit card company to take legal action in recovering the money they lent you with their credit card.

Low Interest Credit Cards

Although all credit cards have a minimum fee, some credit cards are less of a worry than others. If you think you are the type of person who depends too much on paying the minimum, you can use 0% introductory APR credit cards to make the minimum monthly payment and take advantage of the 0% interest for the rest of the account balance for an extended period of 15 months or so. After the introductory period, you may apply for another 0% interest credit card or you may also choose a low interest credit card to minimize the interest cost.

Credit CardsPurchase APRTransfer InfoAnnual Fee Credit Level
BankAmericard® credit card

0% intro APR
for 18 billing cycles

14.99% - 24.99% Variable APR after that

0% intro APR
for 18 billing cycles for any balance transfers made in the first 60 days

14.99% - 24.99% Variable APR after that

$0

Excellent / Good CreditApply NowView Card Details
  • 0% Introductory APR for 18 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends, 14.99% - 24.99% Variable APR will apply. A 3% fee (min $10) applies to all balance transfers
  • No annual fee
  • No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply
  • Access your FICO® Score for free within Online Banking or your Mobile Banking app
HSBC Gold Mastercard®

0% intro APR
for 18 months

12.99% - 20.99% Variable* APR after that

Rates & Fees

0% intro APR
for 18 months

12.99% - 20.99% Variable* APR after that

$0

Good, Excellent CreditApply NowView Card Details
  • 0% Intro APR on purchases and balance transfers for the first 18 months from account opening. Then a variable APR of 12.99% - 20.99% will apply.
  • No Penalty APR.
  • Late Fee Waiver.
  • No Foreign Transaction Fees.
  • $0 Annual Fee.
  • $0 liability for unauthorized purchases.
  • Terms Apply.
Truly Simple® Credit Card from Fifth Third Bank

0% intro APR
for 15 billing cycles

13.99% - 24.99%* Variable APR after that

0% intro APR
for 15 billing cycles

13.99% - 24.99%* Variable APR after that

$0

Good, Excellent CreditApply NowView Card Details
  • Start saving by consolidating your high interest rate cards and making everyday purchases on one card that can help you get what you want.
  • Low 0% introductory APR for your first 15 billing cycles after the account is opened on purchases and balance transfers. After that, your variable APR will be 13.99% to 24.99% based on your creditworthiness.
  • No Penalty Rate (APR) for a missed payment
  • No Annual Fee
  • Click to apply now and view the Notices & Disclosures section for Important Rates, Fees and Other Cost Information.
  • 0% Introductory APR for 18 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends, 14.99% - 24.99% Variable APR will apply. A 3% fee (min $10) applies to all balance transfers
  • No annual fee
  • No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply
  • Access your FICO® Score for free within Online Banking or your Mobile Banking app
  • 0% Intro APR on purchases and balance transfers for the first 18 months from account opening. Then a variable APR of 12.99% - 20.99% will apply.
  • No Penalty APR.
  • Late Fee Waiver.
  • No Foreign Transaction Fees.
  • $0 Annual Fee.
  • $0 liability for unauthorized purchases.
  • Terms Apply.
  • Start saving by consolidating your high interest rate cards and making everyday purchases on one card that can help you get what you want.
  • Low 0% introductory APR for your first 15 billing cycles after the account is opened on purchases and balance transfers. After that, your variable APR will be 13.99% to 24.99% based on your creditworthiness.
  • No Penalty Rate (APR) for a missed payment
  • No Annual Fee
  • Click to apply now and view the Notices & Disclosures section for Important Rates, Fees and Other Cost Information.

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