How Do Credit Card Companies Figure Minimum Payment?

Your credit card statement has information about the minimum amount your credit card company requires you to pay every month. Credit card companies follow certain methods to calculate this minimum payment due.

Process

The minimum payment due on credit card balances could be a percentage of the total current balance outstanding. Or the card company could set it at one percent of the principal outstanding plus the total interest payment due.

Significance

The minimum monthly payment is the amount you are required to pay for your account to be in good standing. The minimum payment doesn't fall below a certain floor amount that the credit card companies set.

Considerations

Although you should pay the minimum payment, it will be beneficial to pay more. If not, you will end up paying more in interest charges over the life of the credit card balance.

Resources

• CreditCards.com: The true cost of paying the minimum