Credit Card Minimum Repayment Calculator

Minimum Payment Formula:

\[ Minimum Payment = \max(Fixed Amount, Balance \times Percentage + Interest + Fees) \]

Fixed Amount:

Balance:

Percentage:

Interest:

Fees:

Minimum Payment:

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1. What is the Minimum Payment Calculation?

The minimum payment calculation determines the smallest amount you must pay each month on your credit card balance to remain in good standing with your lender. It's typically calculated as the maximum of a fixed amount or a percentage of your balance plus interest and fees.

2. How Does the Calculator Work?

The calculator uses the minimum payment formula:

\[ Minimum Payment = \max(Fixed Amount, Balance \times Percentage + Interest + Fees) \]

Where:

\( Fixed Amount \) — The minimum fixed payment required by the lender
\( Balance \) — Your current credit card balance
\( Percentage \) — The percentage of balance required as minimum payment
\( Interest \) — Accrued interest for the billing period
\( Fees \) — Any additional fees charged during the billing period

Explanation: The calculation ensures you pay at least the fixed minimum amount, or if the percentage-based calculation is higher, you pay that amount instead.

3. Importance of Minimum Payment Calculation

Details: Understanding your minimum payment helps you budget effectively and avoid late fees and penalty APRs. While paying only the minimum keeps your account in good standing, it extends repayment time and increases total interest paid.

4. Using the Calculator

Tips: Enter all values in their respective currencies. The fixed amount, balance, interest, and fees should be entered in dollars, while the percentage should be entered as a whole number (e.g., 2 for 2%).

5. Frequently Asked Questions (FAQ)

Q1: Why do credit cards have minimum payments?
A: Minimum payments ensure lenders receive some repayment each month while making debt manageable for borrowers, though it significantly extends repayment time.

Q2: Is paying only the minimum payment advisable?
A: No, paying only the minimum extends your debt repayment significantly and increases total interest paid. Always pay more than the minimum when possible.

Q3: How is the percentage determined?
A: The percentage is set by your credit card issuer and is typically between 1-3% of your outstanding balance.

Q4: What happens if I pay less than the minimum?
A: Paying less than the minimum may result in late fees, increased interest rates, and negative marks on your credit report.

Q5: Can the minimum payment change?
A: Yes, minimum payments fluctuate with your balance, interest charges, and fees. They may also change if your card issuer modifies terms.