Minimum Payment

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Minimum payment applies when you use your credit card and run up an outstanding balance. You have the option of making any payment towards the amount you have spent up to the full outstanding balance. You may, alternatively, opt to make the minimum payment that the credit card issuer will allow.

Typically, most credit card issuers will stipulate a minimum payment of £5 or a small percentage, say 3% or 5%, of the outstanding balance on your credit card account.

Some card issuers stipulate an even lower minimum payment of just 2.25% or the total of charges (interest, insurance, handling fees etc) plus £5, whichever is lower.

Remember, constantly making a minimum payment will ensure that it will take years to wipe out your credit card debt.

See: cash card , charge card, credit card , debit card , smart card .

Last Updated: May 2007 © Moneyextra.com

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