A credit card’s minimum payment is the lowest amount you can pay towards your credit card debt in a month. Carry on reading to find out more...
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What is a minimum payment?
The minimum payment on a credit card is the smallest amount you must pay towards your credit card debt each month.
Why do you need to pay it?
- Paying at least the minimum proves to a lender you can manage debt.
- If you don't pay the minimum, it will be reported to credit reference agencies, which could negatively affect your credit score.
- If you don't pay the minimum, you might have to pay late fees.
How to make a minimum payment
3 ways to pay:
- Set up a Direct Debit – you can choose to have the minimum payment taken automatically from your account each month. That way, even if life gets hectic, you won't forget to pay.
- Pay each month by online banking, or your app – it could be an idea to set yourself reminders, so you don't forget.
- Pay each month by phone, or in branch – again, setting reminders could help you remember to do this.
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What if you only pay the minimum?
If you only pay the minimum:
- You'll pay more interest, so your debt will be more expensive.
- You'll be in debt for longer.
- You could find it harder to become debt-free.
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What if you miss a minimum payment?
It's not good to miss a payment because:
- You could be charged a fee for late payment.
- You could lose any 0% offer.
- Your credit score could lower, which could make it harder and more expensive to borrow.
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