In this article, we’re explaining what is the minimum amount due in a credit card billing statement.
In short, it is the minimum amount that the cardholder needs to pay to stay in good standing with the credit card issuer.
However, as we’ll discuss, there are specific nuances that you need to be aware of, which we’ll discuss below.
Additionally, we will answer common questions we receive on the topic from our members.
This article is part of our free series on US credit cards and banking, including how to get a US-issued credit card, which you can access by clicking here right now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Is the Minimum Amount Due in a Credit Card?
- What Happens If I Don’t Make a Minimum Payment on My Credit Card?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
What Is the Minimum Amount Due in a Credit Card?
The minimum amount due in a credit card statement refers to the amount that a cardholder will need to pay in order to stay in good standing with the card issuer. In other words, it is the cardholder’s minimum financial obligation that they need to meet each month. Of course, cardholders may choose to pay more than the minimum amount due, including up to the entire outstanding balance.
It’s important to note that when a cardholder only pays the minimum amount due in a credit card statement, they will incur interest charges on the remaining outstanding balance. Additionally, the interest charged by credit card issuers is often much higher than other credit products, like personal loans, lines of credit, or mortgages.
With this in mind, cost-conscious individuals looking to avoid additional payments may elect to pay their entire credit card balance each month instead of the minimum amount due.
How Do I Know My Credit Card Minimum Payment Amount?
You can know your credit card minimum payment amount for each month by reviewing your credit card statement or by logging into the online platform for your credit card issuer. In both cases, you will want to look for the “minimum monthly payment”, which refers to the minimum amount that you need to pay to stay in good standing.
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What Happens If I Don’t Make a Minimum Payment on My Credit Card?
What happens if you don’t make a minimum payment on your credit card will ultimately depend on your card provider and card agreement. Likewise, it may depend on how long you wait to pay the minimum payment.
For example, most credit card issuers will automatically levy additional charges for late payment and higher interest charges will also apply. Additionally, your late payment will appear on your credit history and will negatively impact your credit score.
Should I Pay the Minimum Due or Total Due on a Credit Card?
Whether you should pay the minimum due or the total due in your credit card statement each month ultimately depends on your personal circumstances, other financial obligations, other outstanding debts, and the specific metrics that you are trying to optimize for.
That said, if you are looking to reduce the total amount that you spend on credit-related activities, you may want to consider paying off the entire balance of the card each month if this is something you can facilitate.
On the other hand, if you have other outstanding debts with higher interest rates or that you want (or need) to pay off first, you may want to consider paying the minimum monthly payment in order to meet those objectives.
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into what the minimum amount is due on a credit card. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Does Minimum Due Affect Credit Score?
The minimum due does not affect your credit score if you pay the total minimum due each month. That said, only paying the minimum due may affect your overall credit utilization, which means that the total amount of credit used versus the total amount available to you. Generally speaking, it is best to keep your credit utilization below 30%. However, if you only pay the minimum due each month and continue to use the card regularly, you may find that your utilization score increases.
Should You Only Pay the Minimum Amount Due?
Whether you should only pay the minimum amount due depends on your specific objectives and situation. In other words, are you able to afford to pay the entire balance or can you only afford to pay the minimum balance? Do you have other credit obligations you need to meet or financial goals you are trying to navigate? All of these considerations can impact whether you decide to pay the minimum amount due or the total outstanding balance on a card.
What Will Happen If I Pay Only the Minimum Amount Due on My Credit Card For a Long Time?
What will happen if you pay only the minimum amount due on your credit card for a long time will ultimately depend if you continue to use the card and what the total balance of the card is compared to the available credit. In other words, will your credit utilization increase or stay stable? This can impact your credit score and affect your ability to access leverage elsewhere. Additionally, when you only pay the minimum balance, you will end up paying significantly more back to the credit card issuer through interest. So, it’s significantly cheaper for the cardholder overall if they can pay off the card as soon as possible.
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