1. What is Minimum Payment?

The minimum payment is the lowest amount you must pay on your credit card each month to keep the account in good standing. It's typically calculated as a percentage of your balance plus any interest or fees.

2. How Does the Calculator Work?

The calculator uses the minimum payment formula:

Where:

• \( Balance \) — Current credit card balance in dollars
• \( Percentage \) — Minimum payment percentage set by issuer
• \( Interest \) — Accrued interest charges in dollars

Explanation: Most credit card issuers require you to pay either a fixed percentage of your balance (typically 1-3%) plus interest, or a fixed minimum amount (e.g., $35), whichever is greater.

3. Importance of Minimum Payment

Details: Making only minimum payments will keep your account in good standing but will result in paying more interest over time. It's best to pay more than the minimum whenever possible.

4. Using the Calculator

Tips: Enter your current balance, the minimum payment percentage (usually found in your cardholder agreement), and any accrued interest. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: Why is my minimum payment different each month?
A: Minimum payments change based on your balance fluctuations and interest charges. Higher balances or interest rates result in higher minimum payments.

Q2: Is paying just the minimum bad?
A: While it keeps your account current, it leads to higher interest costs and longer repayment periods. Always pay more than minimum if possible.

Q3: What's a typical minimum payment percentage?
A: Most issuers use 1-3% of the balance, but check your cardholder agreement for exact terms.

Q4: Do all credit cards use this formula?
A: Some may use different methods, like flat minimums ($25-$35) or percentage-only calculations. Always verify with your issuer.

Q5: How can I reduce my minimum payment?
A: Paying down your balance or transferring to a lower-interest card can reduce minimum payments, but focus on paying off debt completely.