1. What is the Minimum Payment Calculation?

The minimum payment is the lowest amount you can pay on your credit card bill to keep your account in good standing. It typically consists of a percentage of your balance plus any interest or fees.

2. How Does the Calculator Work?

The calculator uses the minimum payment formula:

Where:

• \( PMT \) — Minimum payment ($)
• \( balance \) — Current credit card balance ($)
• \( min\% \) — Minimum payment percentage (%)
• \( interest \) — Accrued interest ($)

Explanation: The calculation ensures you pay at least the required minimum while accounting for interest charges.

3. Importance of Minimum Payment Calculation

Details: Understanding your minimum payment helps with budgeting and avoiding late fees, though paying only the minimum can lead to long-term debt due to accumulating interest.

4. Using the Calculator

Tips: Enter your current balance, the card's minimum payment percentage (typically 1-3%), and any accrued interest. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is my minimum payment different each month?
A: It varies with your balance changes, interest charges, and sometimes includes fees.

Q2: Is paying just the minimum payment a good idea?
A: No, it leads to higher interest costs. Always pay more than the minimum when possible.

Q3: How is interest calculated on credit cards?
A: Most cards use daily periodic rates based on your APR divided by 365 days.

Q4: Can the minimum payment percentage change?
A: Yes, credit card issuers may adjust terms, though they must notify you first.

Q5: What happens if I pay less than the minimum?
A: You may incur late fees, penalty APRs, and damage to your credit score.