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Minimum payment

Minimum payment is a common term. Learn more about it at

What is a minimum payment?

A minimum payment is the least amount owed on a debt by a set due date without incurring penalties. Minimum payment is a term commonly associated with credit card accounts.

Deeper definition

A minimum payment is determined by the total balance owed on the account and the interest rate. Credit card customers receive a monthly bill notifying them of the minimum payment amount, as required by the Credit Card Accountability Responsibility and Disclosure Act, or CARD Act.

Consumers are encouraged to pay more than the minimum payment to avoid interest charges piling up. Paying just the minimum due each month can lead to hundreds or thousands of dollars in additional costs and keeps a person in debt longer. In certain circumstances, the debtor can ask the lender to lower the interest rate or minimum payment.

Minimum payment examples

Janie owes $5,000 on her only credit card, which has a 14.99 percent interest rate. Her monthly minimum payment is $100. But if she pays only the minimum every month, it will take Janie 79 months, or more than six years, to pay off her balance. Janie’s goal is to pay off the card in two years. She uses Bankrate’s credit card calculator and figures that she must pay $242.41 per month in order to pay off her balance in two years.

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