What Is a Minimum Payment on a Credit Card?

A minimum payment is the smallest amount you can pay a credit card issuer to keep your account in good standing. While minimum payments can provide some financial breathing room during tough months, they are not typically an effective way to get out from under credit card debt.

How Do You Find Your Minimum Payment?

Your minimum payment is listed at the top or on the first page of your credit card statement, typically under “Payment Information.” This section also shows how long it would take to pay off your current balance if you only make minimum payments and don’t add new charges.

How Are Minimum Payments Calculated?

There is no single, standard way that all credit card issuers calculate minimum payments. However, two common methods are:

• A flat percentage of the balance owed, usually between 2% and 4%
• A percentage (1% is typical) plus interest and fees for the billing period

In some cases, if your balance is below a certain required minimum, such as $25 or $35, then payment would be due in full.

5 Reasons Your Minimum Payment Can Go Up

Among the reasons your minimum payment could increase:

1. You missed a payment: Missing a payment due date can result in late fees and a penalty interest rate, which can increase your minimum payment.
2. You paid late: Even if you pay within 30 days of the due date, you might be charged a late fee, which can also trigger a penalty interest rate.
3. You incurred more debt: If the total amount you owe on the card increases month over month, your minimum payment may increase as well.
4. You took advantage of special financing: Special financing offers, such as interest-free payments over time, can increase your minimum payment.
5. You took a cash advance: Cash advances have fees and higher interest rates, which can increase your minimum payment.

The Bottom Line

If your credit card statement balance changes, your minimum payment might change as well. It’s important to pay at least the minimum payment to keep your account in good standing. Paying more than the minimum will help you pay off debt more quickly.

If you need to carry a balance on a credit card, it can be useful to find one that offers the lowest interest rate you can qualify for—possibly even one with an introductory 0% rate.

Contact O1ne Mortgage for Your Mortgage Service Needs

At O1ne Mortgage, we are dedicated to helping you navigate your financial journey. Whether you need advice on managing credit card debt or are looking for the best mortgage options, we are here to assist you. Call us today at 213-732-3074 for any mortgage service needs. Our team of experts is ready to help you achieve your financial goals.