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nick2008's avatar

What does ‘Minimum payment’ in my credit card bills mean. What happens if pay less than the ‘Minimum payment’?

Asked by nick2008 (15points) December 15th, 2008
Observing members: 0 Composing members: 0

9 Answers

joni1977's avatar

It means the amount on the invoice is the MINIMUM amount you can pay on your bill. However, you can pay more. I wouldn’t pay any less, then you’ll have a balance (and possibly a late fee) which wouldn’t look good on your credit rating, esp. if you’re establishing credit.

Jeruba's avatar

But it is better to pay something than nothing. If you cannot pay the minimum, just can’t do it, pay what you can. It is better for them to see “activity” than simply nothing. We learned that one the hard way back in our bad old days, when we were young and busy finding out which mistakes we never wanted to make again.

Trustinglife's avatar

One more cautionary note… while Jeruba may indeed be right about paying something (Jeruba usually is right, after all), it doesn’t count nearly as much as meeting the minimum. If this is the first time the minimum hasn’t been paid, I believe the credit card companies can and will jack up your interest rate from something reasonable to something outrageous. For me, it might mean 14% to 29%.

If I were in your shoes, I would go waaaay out of my way to meet the minimum.

Jeruba's avatar

Oh, no doubt you are right, @TL. And of course the creditors are all very nervous right now and likely to pounce on anybody who looks like a bad risk. Your advice is very sound.

I am just thinking that a person really could find himself looking at a minimum payment on one card that’s more than he can afford to spread across all his bills. When I was there (thank goodness it’s been a long time) I tried making the minimum on card A this month, B the next, and so on, figuring they’d all be satisfied in their turn. Bad idea. All the wolves came calling at once. It would have been much better to send each one $20 every month than to skip a month with anybody

In time we paid everything off in full, and now we stay current and never let ourselves get behind. My stomach doesn’t gnaw every day and night as it used to. But man, I haven’t forgotten.

Trustinglife's avatar

Yeah. I’m not working right now, and my new strategy is to stop using multiple credit cards, as I used to. So now I’m just racking up some debt on one credit card, rather than accumulating debt on all of them. Feels more manageable to me.

madcapper's avatar

Yeah I stuck with one but I maxed it and now I am screwed! haha my recommendation is don’t even bother with a credit card.

Jack79's avatar

I’d go with madcapper. Credit cards are satan’s evil tools to make you poor! They were devised only to trick.

Ok, I have one now (used to have 3 at some point), but I can afford to keep it within limits and I only use it as an alternative to real money that I have in credit somewhere, not to buy things I like when in reality I am broke (which is what most people are tempted to do). And I think Jeruba is right, at least as far as my bank is concerned. If you pay even one penny, then the rest just increases at some preposterous rate. But they won’t take legal action against you unless you actually skip a month or two.

Snoopy's avatar

The average American household apparently has 7 credit cards and $8000 in credit card debt.

The credit card companies can arbitrarily raise your interest rate at any time. They don’t even need an excuse of a missed minimum (or less than minimum) payment….although that will get their attention sooner.

Pay as much as you can as quickly as you can.

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