What is the minimum monthly payment on a credit card?

The minimum monthly payment on a credit card in Tennessee differs depending on the terms and conditions of the card agreement. Generally, the minimum payment is calculated as the sum of any past due amounts, an amount representing any interest and fees due, and a percentage of the new balance. In Tennessee, the percentage must be at least 1% or $15 – whichever is greater. For example, if a cardholder has a $1,000 balance with an interest rate of 25%, the minimum payment would include a $25 past due amount, a $25 interest and fee portion, and a $25 principal amount (25%). If the balance was $500, the minimum payment would include a $25 past due amount, a $25 interest and fee portion, and a $12.50 principal amount (2.5%). It is important to note that making the minimum payment can significantly increase the interest paid over time due to the compounding nature of interest. To reduce the amount of interest paid, cardholders should aim to pay more than the minimum monthly payment each month.

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