What is a Minimum Payment?

Many of you have probably noticed that the little section on your credit card bill that reads “Minimum Payment” is considerably lower than your entire bill. The convenience of owning a credit card is having the option of putting off a bill, like a loan, and paying it later. You still have to pay something every month if you want to avoid any penalty fees, though. That is where the minimum payment comes in — the lowest amount of money that you are required to pay on your credit card statement each month.

Credit card companies are required to set the minimum fee so it is possible to bring your balance down, provided you don’t charge anything extra to your balance.

Minimum Payment Calculation

Every credit card company will stipulate their minimum payment calculations in the agreement you initially sign. This will either be a flat fee, or it will be a percentage of your outstanding balance.

If your minimum payment is based on a percentage of your balance, it could be anywhere between 1% and 5% on average. If it is calculated based on a flat fee, it is all fees and interest due that month, plus 1 percent of the principal amount owed. Again, this will be specified in the terms you initially agreed to when you signed up with your credit card.

Pitfalls

Paying the minimum on occasion is not a bad thing. However, it can be a dangerous habit to get into. With the interest accrued on your balance the next month, as well as the additional charges added with your next month’s statement, your balance will continue to grow. Becoming dependent on those minimum payments will not lessen your balance if you continue adding charges to your account. This is how many people fall into debt.

Failure to pay at least the minimum payment will not only bring on penalty fees, but it can also damage your credit rating, and in worse cases, cause the credit card company to take legal action in recovering the money they lent you with their credit card.

Low Interest Credit Cards

Although all credit cards have a minimum fee, some credit cards are less of a worry than others. If you think you are the type of person who depends too much on paying the minimum, you can use 0% introductory APR credit cards to make the minimum monthly payment and take advantage of the 0% interest for the rest of the account balance for an extended period of 15 months or so. After the introductory period, you may apply for another 0% interest credit card or you may also choose a low interest credit card to minimize the interest cost.

Recommendation of 0% Interest Credit Cards

Here are a few top 0% interest credit cards that let you borrow money for at least 12 months.

0% Interest for 18 Months or More

Credit Card		0% Introductory Interest	Annual Fee
	U.S. Bank Visa® Platinum Card	0% on purchases and balance transfers for 20 billing cycles	$0
	BankAmericard® credit card	0% on purchases and qualifying balance transfers for 18 billing cycles	$0
	Citi® Diamond Preferred® Card	0% on purchases for 12 months and on qualifying balance transfers for 21 months	$0
	Citi® Double Cash Card - 18 month BT offer	0% on balance transfers for 18 months	$0

0% Interest for 15 Months

Credit Card		0% Introductory Interest	Annual Fee
	Bank of America® Customized Cash Rewards credit card	0% on purchases and qualifying balance transfers for 15 billing cycles	$0
	Citi Rewards+® Card	0% on purchases and balance transfers for 15 months	$0
	Blue Cash Everyday® Card from American Express	0% on purchases and balance transfers for 15 months (rates & fees)	$0 (fees)
	Chase Freedom Unlimited®	0% on purchases for 15 months	$0
	Mastercard® Titanium Card™	0% on balance transfers made in the first 45 days for 15 billing cycles	$195 ($95 for each authorized user added to the account)

0% Interest for 12 Months

Credit Card		0% Introductory Interest	Annual Fee
	Bank of America® Travel Rewards credit card	0% on purchases for 15 billing cycles	$0
	Blue Cash Preferred® Card from American Express	0% on purchases for 12 months (rates & fees)	$0 introductory annual fee for the first year, then $95. (fees)
	U.S. Bank Altitude Go Visa Signature Card	0% on purchases and balance transfers for 12 billing cycles	$0
	American Express Blue Business Cash™ Card	0% on purchases for 12 months from date of account opening (rates & fees)	$0 (fees)
	The Blue Business® Plus Credit Card from American Express	0% on purchases for 12 months from date of account opening (rates & fees)	$0 (fees)
	Ink Business Cash℠ Credit Card	0% on purchases for 12 months	$0
	Ink Business Unlimited℠ Credit Card	0% on purchases for 12 months	$0

0% APR credit cards are great for allowing cardmembers to hold a balance for a long period without accruing any additional fees. They are safer cards to use if you are worried about falling into debt.