DEFINITION of 'Minimum Monthly Payment'

The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company. Making the monthly minimum payment on time is the least a consumer needs to do, to avoid late fees and to have a good repayment history on his credit report. The amount of the minimum monthly payment is calculated as a small percentage of the consumer's total credit balance.

BREAKING DOWN 'Minimum Monthly Payment'

All else being equal, consumers who only make the minimum monthly payment on their credit cards will incur higher interest expenses and take longer to pay off their balances, than consumers who pay more than the minimum each month. The best option is to always pay credit card balances in full and on time, because this strategy prevents the consumer from having to pay any interest or late fees.



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RELATED FAQS
  1. How is the minimum payment on a credit card calculated?

    Even when minimum payments are low, consumers should still aim to pay off credit card balances every month. Read Answer >>
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