What is a minimum payment on a credit card?

A minimum payment on a credit card is the smallest amount of money you are required to pay toward your credit card balance each month. It is typically calculated as a percentage (usually around 2-5%) of your overall account balance, or as a fixed dollar amount, whichever is greater. In South Carolina, the minimum payment is determined by the credit card agreement that was signed by the cardholder. If the cardholder fails to make the agreed-upon minimum payment, the unpaid balance will typically accrue interest and may result in late fees as well. For many people, making the minimum payment each month can be a convenient way to pay off credit card debt in a longer period of time. However, this practice can be risky as the interest that accumulates will cause the actual amount owed on the card to be much higher than the amount initially charged. It is also important to consider that most credit cards have a maximum card balance and when this amount is reached, the cardholder will need to pay off the full balance in order to avoid being charged an over-the-limit fee. It is important for all South Carolina credit card holders to be mindful of their minimum payments, as that is the key to avoiding debt and keeping credit scores healthy. Otherwise, late payments and fees can cause major impacts to a credit report and score. If the minimum payment is too difficult for cardholders to make, they should reach out to their credit card companies for assistance.

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