Minimum Monthly Payment

AAA

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.

INVESTOPEDIA EXPLAINS '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.



RELATED TERMS
  1. Credit Card

    A card issued by a financial company giving the holder an option ...
  2. Charge Card

    A card that charges no interest but requires the user to pay ...
  3. Credit Limit

    The amount of credit that a financial institution extends to ...
  4. Average Daily Balance Method

    A credit card accounting method where interest charges are based ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), ...
  6. Luhn Algorithm

    An algorithm used to validate a credit card number.
RELATED FAQS
  1. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  2. What types of liens are seen as good and which are bad for my credit?

    Creditors that allow purchases to be made through financing often require property to be pledged against a credit account; ... Read Full Answer >>
  3. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  4. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>
  5. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>
  6. How do I transfer my credit card history from one country to another?

    It is currently not possible to transfer your credit history to another country if you relocate. The credit metrics used ... Read Full Answer >>
Related Articles
  1. Credit & Loans

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
  2. Credit & Loans

    How To Read Loan And Credit Card Agreements

    The devil is always in the details! Find out what you're signing yourself up for.
  3. Credit & Loans

    Check Your Credit Report

    Make sure there are no errors holding you back from obtaining a loan.
  4. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  5. Options & Futures

    Top 7 Most Common Financial Mistakes

    Choose fortune over disaster by avoiding these money traps.
  6. Credit & Loans

    American Express Cards: Centurion Vs. Platinum

    If you're offered a coveted black card from AmEx, should you accept it?
  7. Credit & Loans

    Credit Cards Offering The Most Airline Miles

    Besides one mile for every dollar spent on purchases, you can rack up thousands more – up to 50,000 – thanks to these cards' intro offers and bonus points.
  8. Economics

    What Does a Creditor Do?

    A creditor is a person or entity that loans money or provides goods or services to another entity with the expectation of being paid back in the future.
  9. Credit & Loans

    Review: Chase IHG Rewards Club Select Credit Card

    This rewards card gives you instant platinum elite status at more than 4,700 Intercontinental Hotel Group properties. Does that make it worth having?
  10. Budgeting

    What is Discretionary Income?

    Discretionary income is an economic term referring to income left over after a person pays taxes and living expenses.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!