Home
Back
Minimum Payment Calculation:
| From: | To: |
The Money Saving Expert Credit Card Calculator helps determine the minimum payment required on a credit card balance. It calculates the higher value between a fixed minimum amount and a percentage of the outstanding balance.
The calculator uses the minimum payment formula:
Where:
Explanation: Credit card companies typically require you to pay the higher of either a fixed minimum amount (e.g., £5) or a percentage of your balance (e.g., 1-3%).
Details: Understanding your minimum payment helps with budgeting and financial planning. While paying only the minimum keeps your account in good standing, it results in paying more interest over time and taking longer to clear the debt.
Tips: Enter your current credit card balance in GBP, the fixed minimum payment amount in GBP, and the percentage of balance as a decimal (e.g., 0.01 for 1%). All values must be valid non-negative numbers.
Q1: Why do credit cards have minimum payments?
A: Minimum payments ensure borrowers make regular payments toward their debt while maintaining account activity and avoiding late fees.
Q2: What are typical minimum payment percentages?
A: Most UK credit cards require 1-3% of the outstanding balance as a minimum payment, often with a fixed minimum (typically £5-£25).
Q3: Is it better to pay more than the minimum?
A: Yes, paying more than the minimum reduces interest charges and helps clear the debt faster, saving you money in the long run.
Q4: What happens if I only pay the minimum?
A: You'll remain in good standing but will pay significantly more interest over time, potentially taking years to clear the balance.
Q5: Can minimum payments change?
A: Yes, minimum payments can change based on your balance, interest rate changes, or if the card issuer adjusts their terms.