What Is Minimum Due on a Credit Card?
When you receive your monthly credit card statement, you will notice a term called
minimum due. Many beginners do not understand what this amount means.
Some people think paying the minimum due clears their bill, but this is not true.
This page explains what minimum due on a credit card is, why it exists, and how it works
using very simple words for complete beginners.
If you are new to credit cards, first understand the basics from our main guide:
What Is a Credit Card?
.
Meaning of Minimum Due
The minimum due is the smallest amount of money you must pay on your credit
card bill before the due date. This amount is decided by the credit card issuer.
It is usually a small percentage of your total outstanding balance. In many cases,
it can be around 2% to 5% of the total bill, or a fixed minimum amount like $25,
whichever is higher.
Paying the minimum due means your payment is considered on time. However, it does
not mean that your full credit card balance is paid off.
Why Minimum Due Is Important
The minimum due is important because it helps keep your credit card account active
and avoids penalties. Credit card companies require at least this small payment
every month.
- Prevents late payment fees (late fees)
- Avoids immediate damage to your credit score
- Keeps your credit card account in good standing
- Shows basic payment responsibility
If you do not pay at least the minimum due, the bank may charge a late fee and
report the missed payment to credit bureaus.
How Minimum Due Works
The process of minimum due works in a simple way:
- You use your credit card to make purchases
- The billing cycle ends (billing cycle)
- The bank generates a monthly statement (credit card statement)
- The statement shows total balance and minimum due
- You must pay at least the minimum due before the due date (due date)
If you pay only the minimum due, the remaining balance stays on your credit card.
Interest (APR) is charged on this remaining amount in the next billing cycle.
Simple Example
Assume your total credit card bill is $1,000.
Your credit card company sets the minimum due as $40.
If you pay only $40:
- Your payment is considered on time
- Your remaining balance becomes $960
- Interest is charged on the $960 balance
Paying only the minimum due every month reduces your debt very slowly,
and you will pay more interest over time.
Common Questions
Is paying the minimum due enough?
Paying the minimum due avoids late fees, but it does not clear your debt.
Interest will continue to apply on the remaining balance.
Does the minimum due change every month?
Yes. The minimum due usually changes because it depends on your total outstanding balance.
If your balance increases, the minimum due may also increase.
What happens if I pay less than the minimum due?
If you pay less than the minimum due or miss the payment, you may face late fees,
higher interest rates, and damage to your credit score.
Does minimum due include interest?
Yes. The minimum due often includes a portion of interest charges and any applicable fees.
The minimum due exists to make sure you pay at least something every month.
However, paying more than the minimum due is always better for reducing debt faster.
To understand how this fits into overall credit card usage, read our main beginner guide:
What Is a Credit Card?
.
Mohamed Faisal writes about money management, investing, and personal finance tools that help people grow their wealth.
