1. What is the Minimum Payment Calculation?

The minimum payment is the lowest amount you can pay on a credit account to keep it in good standing. It's typically calculated as a percentage of your outstanding balance.

2. How Does the Calculator Work?

The calculator uses the minimum payment formula:

Where:

• \( Balance \) — Current outstanding balance (USD)
• \( Min Rate \) — Minimum payment rate (decimal)

Explanation: The calculation multiplies your current balance by the minimum payment percentage (expressed as a decimal) to determine your minimum payment amount.

3. Importance of Minimum Payment Calculation

Details: Understanding your minimum payment helps with budgeting and avoiding late fees, though paying only the minimum will result in paying more interest over time.

4. Using the Calculator

Tips: Enter your current balance in USD and the minimum payment rate as a decimal (e.g., 0.02 for 2%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical minimum payment rate?
A: Most credit cards use 1-3% of the balance, often with a minimum dollar amount (e.g., $25).

Q2: Is paying only the minimum payment advisable?
A: No, paying only the minimum will result in higher interest costs and a longer payoff period.

Q3: How is minimum payment different from statement balance?
A: Statement balance is what you owe, while minimum payment is the smallest amount you can pay to avoid penalties.

Q4: Does minimum payment include interest?
A: Yes, minimum payments typically cover some interest plus a small portion of principal.

Q5: Can minimum payment change?
A: Yes, it changes with your balance and sometimes with changes to your card terms.