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Minimum Payment

Contributor

Minimum Payment

every time i pay my credit card i see that it asks me if i want to pay Minimum Payment since im new to credit cards i never really bothered to learn what it is if i do pay the Minimum Payment for what ever reason is it bad for your credit score or anything like that

23 REPLIES
Frequent Contributor

Re: Minimum Payment

If you pay the minimum payment you will pay interest on your purchaes starting from the beginning of that billing cycle until you've gone through a whole cycle after you've paid you account in full.

Contributor

Re: Minimum Payment

so for example lets say my balance is $600 i wil have to pay the $600 plus the lets say $40 intrest ?? 

 

and basically it is very bad for my credit

Established Contributor

Re: Minimum Payment

And hard on your wallet!

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico)XP 735 (FAKO)
Updated scores 05/01/17 EQ 824, TU 812 EXP 810 (all Fico scores) Remember the Three P's: Pay early in Full, Pay on Time, Patience
Established Contributor

Re: Minimum Payment


YoungJay18 wrote:

so for example lets say my balance is $600 i wil have to pay the $600 plus the lets say $40 intrest ?? 

 

and basically it is very bad for my credit


I don't believe that paying the minmum is necessarily bad for your credit. Not paying at all or not paying on time is bad for your credit. Some people pay only the minimum every month with no issues while others (myself included) PIF each month. Paying the minimum simply means you pay more and, let's face it, who wants to do that? There are times however when you can only pay the minimum and it is nice to have that flexibility. As long you pay AT LEAST the minimum, you and your credit will be fine.

 

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Senior Contributor

Re: Minimum Payment

I use the "minimum payment" option as an emergency option...

It is not bad for your score necessarily, unless you have a crap ton of debt/maxed out cards and you are only making the min pmt on them.

The min pmt is like a payment you want to make no matter what!!!!!! It keeps your credit in goodstanding.

Also, the min pmt is typically what lenders base your debt to income on... They just want to make sure you can afford the minimum payment before theu extend you credit.
Also, the higher the interest rate, the higher the minimum payment....

Hope this helps :-)
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Frequent Contributor

Re: Minimum Payment

Yep.  Minimum payment is the absolute lowest payment they're asking for to keep your account in good standing.  You can draw out your payments as long as you'd like, but  you're on the losing end as they're making a killing off you with interest charges.  If you absoutely have to carry a balance, pay MORE than the minimum if you can.  If you can't afford that, at least make the minimum until you can PIF.


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Homeowner since 05/29/13
Contributor

Re: Minimum Payment

if i do make the minimum payment does my credit reset like will i start over with my whole 500 credit line or not ??

Contributor

Re: Minimum Payment

Making the minimum payment does not have a direct negative impact on your scores at all. 

What it does do like others have said is put you in a position to pay interest on those balances and your UTIL is impacted. 

 

Personally, when I have to settle for a minimum only payment on any account I add the interest on top of it. 

Example: Minimum payment is $25 - interest on that account this month is $11 - I pay at least $36 (if not a little more). 

 

As long as you make at least the minimum payment the account is in good standing and will report as such. 

 


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Regular Contributor

Re: Minimum Payment

The Min. Payment is the just the amount the credit company is asking to maintain your account in good balance. This isn't so bad if you just open a credit card and you recieved a "no apr promotion" for a specific time period. You can pay the min. payment and will not be charge interest. I generally will avoid this if you are not in a promotion period in any of your credit cards. I say pay MORE than the minimum payment (if you can't pay in full) to quickly resolve your debt and avoid the unneccessary interest charges. I know the sitution can be different for some, but try to pay more if you can.

 

I also can't help but wonder how a credit company percieved one who have a balance lingering in their account for a long period of time, paying only the min. amount. 

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