What is the Meaning of Credit Card Minimum Payment

Many 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 Cards	Purchase APR	Transfer Info	Annual Fee	Credit Level
Wells Fargo Propel American Express® Card Hide Benefits Show Benefits	0% intro APR for 12 months 14.24% - 26.74% (Variable) APR after that	0% intro APR for 12 months 14.24% - 26.74% (Variable) APR after that	$0	Good / Excellent CreditLearn More View Card Details
New! Earn 30K bonus points when you spend $3,000 in purchases in the first 3 months - that's a $300 cash redemption value Earn 3X points for eating out and ordering in Earn 3X points for gas stations, rideshares and transit Earn 3X points for travel including flights, hotels, homestays and car rentals Earn 1X points on other purchases $0 Annual Fee 0% intro APR for 12 months on purchases and balance transfers, then a 14.24%-26.74% variable APR; balance transfer fees apply Select "Apply Now" to learn more about the product features, terms, and conditions
Wells Fargo Cash Wise Visa® Card Hide Benefits Show Benefits	0% intro APR for 12 months 14.74% - 26.74% (Variable) APR after that	0% intro APR for 12 months 14.74% - 26.74% (Variable) APR after that	$0	Good / Excellent CreditLearn More View Card Details
Earn a $200 cash rewards bonus after spending $1,000 in the first 3 months Earn unlimited 1.5% cash rewards on purchases Enjoy 1.8% cash rewards on qualified mobile wallet purchases, like Apple Pay® or Android Pay™, during the first 12 months from account opening No category restrictions or sign ups and cash rewards don't expire as long as your account remains open Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your Wells Fargo Cash Wise Visa^® Card 0% Intro APR for 12 months on purchases and balance transfers, then a 14.74%-26.74% variable APR; balance transfer fees apply $0 Annual Fee Select "Apply Now" to learn more about the product features, terms, and conditions
Barclaycard Ring® Mastercard® Hide Benefits Show Benefits	13.74% Variable APR Rates & Fees	0% intro APR for within 45 days of account opening 13.74% Variable APR after that	$0	Good / Excellent CreditLearn More View Card Details
Enjoy a 0% intro APR for 12 months on balance transfers made within 45 days of account opening. After that, a variable 13.74% APR will apply Low 13.74% variable APR on purchases and cash advances No annual fee No foreign transaction fees International Chip and PIN

Wells Fargo Propel American Express® Card

Apply Now

New! Earn 30K bonus points when you spend $3,000 in purchases in the first 3 months - that's a $300 cash redemption value
Earn 3X points for eating out and ordering in

Wells Fargo Cash Wise Visa® Card

Apply Now

Earn a $200 cash rewards bonus after spending $1,000 in the first 3 months
Earn unlimited 1.5% cash rewards on purchases

Barclaycard Ring® Mastercard®

Apply Now

Enjoy a 0% intro APR for 12 months on balance transfers made within 45 days of account opening. After that, a variable 13.74% APR will apply
Low 13.74% variable APR on purchases and cash advances