The least amount you can pay on your credit card balance without being punished with a late payment fee and an increase in interest charges is the minimum payment of your credit card. Sometimes, your minimum payment may vary. Yes, if you go through your billing statement every month, you will find out that your minimum payment do change. It may be higher now, lower later.
You are to know and understand how to calculate your minimum payment so that you can easily make a budget for your credit card monthly payment. Because the minimum payment is unsteady and if you understand it, you can appraise it. You can even go further to predicting what you will pay on your credit card for every month as your minimum payment.
There are different ways of calculating your minimum payment, continue reading, you will be able to understand this method very well. Also, you will be able to understand how it is being calculated so, these methods are :
Calculating the percentage of your balance | Calculate The Minimum Payment of your Credit Card
Some credit card issuers calculate your minimum payment as a percentage of your balance, which is between 2% and 5%. That is calculating when your minimum payment is due using the balance at the end of your billing cycle.
For instance; if you have a $1000 balance and your minimum payment is 2% of your balance. Then your minimum payment is calculated as 2/100 X 1000 = $20.
Calculating the percentage of your balance and (+) finance charge.
Also, taking a percentage of your balance at the end of the billing cycle plus your monthly finance charge, you can calculate your minimum payment.
Let say, you have no debt, your minimum payment is 1% of your balance, card APR is 12%, your card balance is $1000 and your finance charge for the month is $10. If this is the case your minimum payment becomes $10 + $10 = $20.
Other fees that can be added to your minimum payment.
There are some fees which when added to your minimum payment for a month could greatly increase your minimum payment for that month. These fees are the past due payment and the penalty fees.
Sometimes, your credit card issuer can add an amount that is more than your credit limit to your minimum payment. Example :
when your credit limit is $1,000 and your balance is $1,050 then, your minimum payment becomes 2%of the balance = $21 + $50 =$71.
As soon as you get it, try your best to clear your past due amount and make your credit limit is more than your balance, with this your minimum payment can be reduced.
Know How To Calculate Your Minimum Payment.
To know how or which method your credit card issuer use in calculating, read your credit card agreement. So, find the part titled ” How your minimum payment is calculated” or “Making payments”. But if you wish to make use of an electronic version of your credit card agreement, just use the Find function ( Cltrl+F or Cmd+F) to search for the words “minimum payment.” A customer service representative will help you determine how to calculate a minimum payment.
Why Your Minimum Payment Increases.
Your minimum payment cannot just increase like that, there are reasons. Your minimum payment can increase if:
- Your one of your past payment was late.
- There was an increase in your balance.
- You exceed your credit limit.
- You have an increased interest rate.
- Also, the credit card issuer can change the percentage the use in calculating, if you ask for a bigger credit risk or as company principle.
- Maybe your complete balance is your minimum payment.
Sometimes, your credit card issuer may ask you to complete your balance:
When your balance is below certain amount (such as $25), your minimum payment can be your complete balance.
When your account was charged off, you will not be able to make your monthly payment and your credit card issuer can ask for your complete balance.
Those having a charge card, will have to pay the complete balance on their credit card, as their minimum payment. Therefore, you are not permitted to make part payment on your credit card balance because, charged cards does not give you the opportunity of carrying credit card balance.