What is the Meaning of Credit Card Minimum Payment

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
Capital One VentureOne Rewards Credit Card Hide Benefits Show Benefits	0% intro APR for 12 months 15.49% - 25.49% (Variable) APR	15.49% - 25.49% (Variable) APR No balance transfer fee	$0	Excellent, Good CreditLearn More View Card Details
$0 annual fee and no foreign transaction fees Earn a bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel Earn unlimited 1.25X miles on every purchase, every day Travel when you want with no blackout dates and fly any airline, stay at any hotel, anytime Miles won't expire for the life of the account and there's no limit to how many you can earn Transfer your miles to over 10+ travel loyalty programs Enjoy 0% intro APR on purchases for 12 months; 15.49% - 25.49% variable APR after that
ABOC Platinum Rewards Credit Card Hide Benefits Show Benefits	0% intro APR for 12 months 12.90% to 22.90% Variable APR after that	12.90% to 22.90% Variable APR	$0	Excellent CreditApply Now View Card Details
0% Intro APR on Purchases for 12 months; after that the variable APR will be 12.90% - 22.90% (V), based on your creditworthiness Earn $150 Statement Credit after you spend $1,200 on purchases within the first 90 days from account opening Earn 5x rewards on up to $1,500 in combined purchases each quarter in popular categories such as dining, groceries, travel, and automotive No upper limit on the points you can accumulate, and since points never expire, you can save up for a big award! Earn Points on Every Purchase! It's simple: $1 = 1 Point No Annual Fee Select Your Rewards Your Way
American Express Blue Business Cash™ Card Hide Benefits Show Benefits	0% intro APR for 12 months from date of account opening 13.24% - 19.24% Variable APR after that Rates & Fees	13.24% - 19.24% Variable APR	No annual fee	Good, Excellent CreditApply Now View Card Details
Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1%. Cash back earned is automatically credited to your statement. From workflow to inventory to floor plans, your business is constantly changing. That's why you've got the power to spend beyond your credit limit with Expanded Buying Power. Just remember, the amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to us and other factors. 0.0% intro APR on purchases for 12 months from the date of account opening, then a variable rate, 13.24% - 19.24%, based on your creditworthiness and other factors as determined at the time of account opening. No Annual Fee Terms Apply
The Blue Business® Plus Credit Card from American Express Hide Benefits Show Benefits	0% intro APR for 12 months from date of account opening 13.24% - 19.24% Variable APR after that Rates & Fees	13.24% - 19.24% Variable APR	No annual fee	Good, Excellent CreditApply Now View Card Details
Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners. 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter. Enjoy the flexibility to put more purchases on the Card and earn rewards when you buy above your credit limit. You've got the power to use your Card beyond its credit limit with Expanded Buying Power. More buying power for your business means more opportunities to earn points. That's everyday business with the Blue Business Plus Card. *The amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to us, and other factors. 0.0% intro APR on purchases for 12 months from the date of account opening, then a variable rate, 13.24% - 19.24%, based on your creditworthiness and other factors at account opening. No Annual Fee Terms Apply

Capital One VentureOne Rewards Credit Card

Learn More

$0 annual fee and no foreign transaction fees
Earn a bonus of 20,000 miles once you spend $1,000 on purchases within 3 months from account opening, equal to $200 in travel

ABOC Platinum Rewards Credit Card

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0% Intro APR on Purchases for 12 months; after that the variable APR will be 12.90% - 22.90% (V), based on your creditworthiness
Earn $150 Statement Credit after you spend $1,200 on purchases within the first 90 days from account opening

American Express Blue Business Cash™ Card

Apply Now
Rates & Fees

Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1%. Cash back earned is automatically credited to your statement.
From workflow to inventory to floor plans, your business is constantly changing. That's why you've got the power to spend beyond your credit limit with Expanded Buying Power.

The Blue Business® Plus Credit Card from American Express

Apply Now
Rates & Fees

Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners. 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter.
Enjoy the flexibility to put more purchases on the Card and earn rewards when you buy above your credit limit*.