How Do Credit Card Minimum Payments Work

If you can't afford to pay off your credit card balance all at once, you can keep your credit card account in good standing by making at least the minimum credit card payment by the due date.

Read on to learn how minimum credit card payments work and different ways issuers calculate these payments.

What Is a Credit Card Minimum Payment?

A minimum payment is the lowest amount you can pay toward your credit card balance by the due date while avoiding late fees, penalty APRs and possible credit damage. Paying your entire statement balance by the due date each month is better but making at least the minimum payments on time can help maintain a positive repayment history, which can help you build credit in the long run.

How Are Your Credit Card's Minimum Payments Calculated?

Different credit card issuers may use one or more methods of calculating the minimum payment depending on the activity on a credit card account, including whether there is billed interest or additional fees and charges such as late fees, amounts past due and overlimit amounts. The terms and conditions of your credit card provide information on how your lender calculates your monthly minimum payment.

You should check these terms and conditions to understand the details on how your monthly minimum payment is calculated for your credit card, but below are general descriptions of common methods that credit card issuers use to calculate minimum payments. 

Flat Percentage

Credit card issuers may treat a certain percentage of your total balance as your minimum payment. It may be 2% to 5% of your total balance. For example, if you've spent $800 on your credit card, and your minimum payment is 2% of your balance, your minimum payment will be $16. 

Fixed amount

The card issuer may set a fixed amount as your minimum payment for credit card balances. In cases where the credit card balance is lower than the fixed amount the entire balance will likely be the minimum payment instead.

Percentage, Interest, Fees and Charges

Issuers may calculate your minimum payment as a flat percentage of your balance combined with billed interest and fees or charges, if there are any. This flat percentage may differ depending on the issuer.

For example, if your card balance is $800, the flat percentage is 1% and you have incurred $12 in interest with $30 in late fees, your minimum payment will be $50. 

How Can You Find Your Credit Card's Minimum Payment?

To find your credit card's minimum payment, you typically can log into your credit card's online account and look under the payment section or check the billing statement. Alternatively, you can call or email your card issuer and inquire about your minimum payment. 

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

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