How do I calculate minimum payment on credit card?
The minimum payment on your credit card is typically calculated as either a flat percentage of your card balance or a percentage plus the cost of interest and fees. Depending on the card issuer and your agreement, either of these methods might be used to calculate your minimum payment.
A minimum payment is usually calculated based on your monthly card balance, including any fees and interest charges. Two methods of calculating minimum payments are common: Flat percentage. You'll pay a percentage of your total statement balance, including interest and fees, usually between 1% and 3%.
Method 1: Percent of the Balance + Finance Charge
1 So, for example, 1% of your balance plus the interest that has accrued. Let's say your balance is $1,000 and your annual percentage rate (APR) is 24%. Your minimum payment would be 1%—$10—plus your monthly finance charge—$20—for a total minimum payment of $30.
The minimum payment on a $5,000 credit card balance is $50, plus any fees, interest, and past-due amounts, if applicable. If you were late making a payment for the previous billing period, the credit card company may also add a late fee on top of your standard minimum payment.
Example: Your card issuer requires you to pay 3% of your outstanding loan balance. You owe $7,000 on your credit card. The minimum payment is 3% of $7,000, or $210.
Calculating your monthly APR rate can be done in three steps: Find your current APR and balance in your credit card statement. Divide your current APR by 12 (for the twelve months of the year) to find your monthly periodic rate. Multiply that number with the amount of your current balance.
The formula is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where M is the monthly payment, P is the loan amount, i is the interest rate (divided by 12) and n is the number of monthly payments. To calculate monthly mortgage payments, you must know the loan amount, loan term, loan type and your credit score.
| Issuer | Standard Minimum Payment |
|---|---|
| Bank of America | $35 |
| Barclays | $25-29 |
| Capital One | $25 |
| Chase | $35 |
With a balance of less than $25, your minimum payment is that total amount. If your balance is over $25, the minimum payment is $25 or 1% of your balance plus new interest and late payment fees, whichever is greater. Any amount that's already past due is also added to your monthly minimum payment.
The minimum payment is the smallest amount of money that you have to pay each month to keep your account in good standing. The statement balance is the total balance on your account for that billing cycle. The current balance is the total amount of your most recent bill plus any recent charges.
What is the minimum payment on a $10000 credit card?
If you only make minimum payments, a $10,000 credit card balance will cost you $16,056.59 in interest and take 346 months to pay off. Minimum payments on a $10,000 balance would start at $267 and decrease as you paid down what you owe.
The minimum monthly payment on a credit card is the lowest amount that a cardholder needs to pay each month to maintain good standing with the credit card issuer. While it's not mandatory to pay off the entire balance, it's advisable to do so to avoid accruing interest charges.
During that time, you'll pay a total of $9,332.25 in interest for a total payoff cost of $14,332.25. 2.5% of the balance (inclusive of interest): It would take 505 months to get rid of your $5,000 credit card balance making just minimum payments at 2.5% of your balance. That's over four decades of payments.
| Issuer | Standard Minimum Payment |
|---|---|
| Capital One | $30 |
| Chase | $35 |
| Citibank | $45 |
| Credit One | $150 |
For example, this could be at least £25 or 1% of the outstanding balance. You will need to pay as a minimum the higher value of the two. A £1,000 balance would have a minimum repayment of £1 based on 1%, but as this is below £25, then your minimum payment will be £25. (Assuming no interest or other fees to pay).
The minimum payment on a 0% APR credit card is usually either a fixed amount or 1% of your statement balance, whichever is greater. Just note that minimum payment is calculated differently by each issuer.
The APR is calculated by taking the annual percentage rate divided by 365 and applying it to the daily balance and repeating that process daily throughout the billing cycle. The interest is then added to the balance on the first day of the next billing cycle, which is your new balance subject to interest.
The Payment Calculator can determine the monthly payment amount or loan term for a fixed interest loan. Use the "Fixed Term" tab to calculate the monthly payment of a fixed-term loan. Use the "Fixed Payments" tab to calculate the time to pay off a loan with a fixed monthly payment.
Suppose your balance (before interest and fees) is $10,000 and you've accrued $160 in interest and $38 in late fees. If your issuer calculates your minimum as 1% of the balance plus interest and fees, you'd have a minimum payment of $298.
You will not be offered any interest-free credit period if you have paid only the Minimum Amount Due (MAD) and not the credit card outstanding in full. Rather, you will be charged an interest amount from the date of purchase. The interest amount will also keep accumulating till you settle the dues.
What happens if I only pay minimum on credit card?
Interest charges add up: Typically, credit companies will charge you high interest rates on unpaid balances. If you only pay the minimum each month, the interest charges can snowball. The additional interest and any other fees are added on to your balance and can increase a lot over time.
The Capital One minimum payment for most credit cards is either $25 or 1% of your statement balance plus any interest and late fees, whichever is greater.
If you have the Capital One Quicksilver Cash Rewards Credit Card, for example, your minimum payment for balances over $25 will be either $25 or 1 percent of your balance (whichever is greater), plus new interest, late payment fees and any past due amounts.
In the average daily balance method with compounding, the issuer takes the balance at the beginning of each day, adds any new charges for that day plus any interest charges on the previous day's balance, and then subtracts any payments or credits made that day.
Your “minimum due” is essentially the lowest amount your bank will accept as payment toward your credit card's balance each month. Whenever you pay it, the rest of your balance begins accruing interest, which is added to your next bill.
