Understanding Your Credit Card Minimum Payments
Decoding Minimum Payments: Your Guide to Smarter Credit Management
Decoding Minimum Payments: Your Guide to Smarter Credit Management
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Knowing how your minimum payment is calculated is crucial for managing your financial health. This knowledge helps you:
Think of your minimum payment as a financial vital sign - it can tell you a lot about your credit card's health and your path to becoming debt-free.
Let's start with a comprehensive overview of how different banks calculate their minimum payments. Below you'll find a quick-reference table showing the calculation methods across major card issuers:
Bank | Minimum Payment Calculation |
---|---|
American Express Personal | The greater of these: $40, 2% of the balance excluding interest and fees*, 1% of your balance plus interest and fees* |
American Express Business | The greater of these: $35, For a balance of $0-$25,000: 1% of the balance plus monthly interest and fees*, For a balance of $25,000-$75,000: 5% of the balance plus monthly interest and fees*, For a balance over $75,000: 10% of the balance plus monthly interest and fees* |
Bank Of America | The greater of these: $25, or 1% of the full balance plus the monthly interest and fees |
Barclay Bank | The greater of these: $27, or 1% of the full balance plus the monthly interest and fees |
Capital One | The greater of these: $25, or 1% of the full balance plus the monthly interest and fees |
Chase | The greater of these: $25, or 1% of the full balance plus the monthly interest and fees |
Citi | The greater of these: $25 or 1% of the full balance plus the monthly interest and fees, or 1.5% of the full balance |
Discover | The greater of these: $35, or 2% of the full balance or $20 plus the monthly interest and fees |
Santander | The greater of these: $25, or 1% of the full balance plus the monthly interest and fees |
Synchrony | The greater of these: $25, or $35 if you had any late payments within the last six months, or 1% of your full balance plus the monthly interest and fees |
Us Bank | The greater of these: $30, or 1% of your full balance plus the monthly interest and fees |
Wells Fargo | The greater of these: $15, or 1% of the full balance plus the monthly interest and fees |
Now, let's dive deeper into some of the more complex calculation methods and what they mean for you.
American Express stands out with its unique approach to minimum payments, offering different structures for personal and business accounts.
Your minimum payment will be the greater of:
Additional charge: 1/24th of any amount over your credit limit
Three distinct tiers:
Note: Any amount over your credit limit is due in full
Discover uses a unique calculation method that can work in your favor depending on your APR:
Key Points:
Citi offers a three-option approach to minimum payments:
Key Points:
Most other banks, including Chase, Capital One, and Wells Fargo, follow a simpler formula: Greater of $25 OR 1% of balance plus interest and fees
Advantages:
Advantages:
Important: Always try to pay more than the minimum when possible. Think of minimum payments as a financial safety net, not a recommended payment strategy.
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