Understanding the Mathematics of Personal Finance

MINIMUM PAYMENT

Every credit card statement shows a minimum payment or a minimum amount due. This is the least amount of money that you can send in (before the due date) that will not trigger late payment fees or fines. Typically, this amount is sufficient to reduce your balance a bit—if you haven’t recently made more payments or received more cash advances.

The calculation of the minimum payment varies from credit card company to credit card company and can be slightly complicated. Usually there’s a lowest minimum payment (something like $15). If your balance due is less than this amount, then your minimum payment will be your balance due. If you don’t want to work through the details of the minimum payment for your credit card, remember that once your balance is significantly higher than the lowest minimum payment, the minimum payment will be enough to reduce your balance by a little bit (assuming that there are no new transactions) but not by much.