Definition · Glossary
Minimum payment
Debt & Debt ManagementBudgeting & Money Management
In plain English
The minimum payment is the smallest amount you are required to pay on a credit card or revolving credit facility each month. Paying only the minimum means interest accrues on the remaining balance, and the debt takes much longer to repay.
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Example
A credit card with a £2,000 balance might have a minimum payment of £50 per month. At this rate, it could take years to clear the balance and cost significantly more in interest.
Don't get caught out
Common misunderstandings
- Meeting the minimum payment keeps you in good standing but does not prevent interest building up on the rest of the balance.