What is the minimum credit card payment and how is it calculated?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

One of the most convenient means of payment today are plastic cards. The most popular among all products offered by banks are credit cards. This is really incredibly convenient - all purchases can be made without thinking about having money in your wallet. The bank provides installments for several tens of days. This allows the most rational use of all available income.

If you want payment "plastic" to be not only convenient, but also profitable, you need to clearly understand the mechanism of its action. First of all, it is worth understanding the method of establishing a minimum payment on a credit card.

What does the minimum deposit mean

The owner of any credit "plastic" has certain obligations to a financial institution. Every month, it is necessary to deposit into the "loan" accountsome amount of money to at least partially repay the resulting debt. Payments must be made on time. This guarantees the solvency of the cardholder and provides him with the opportunity to use such an instrument in the future.

This partial repayment of the amount of debt is called the minimum payment on a credit card. Each financial institution sets its own percentage and determines individual repayment terms. It is highly desirable to comply with them, because if you miss the deadline for depositing funds, the bank has the right to apply pen alties or charge a pen alty.

What determines the amount of payment

This position is negotiated by the credit institution with the borrower at the very first stage of the relationship - it is certainly prescribed in the contract. Most often, the minimum payment on a credit card looks like a few percent of the amount of funds spent by a person in the previous period. Usually it is 5-10%, but it can be completely different. The bank may set a fixed fee. You must pay it monthly, regardless of how much was spent. This is not very convenient, so this scheme is rarely used by financial institutions.

The minimum payment on a credit card itself is heterogeneous and consists of several amounts:

• interest calculated on the amount of actual debt for the billing period;
• part of the loan already used by the borrower, based on the tariff;
• commissions and fees providedcontract;
• fine, pen alty or interest charged by the bank if the borrower fails to comply with the terms of the contract.

VTB-24

Each financial institution offers its own conditions for calculating the minimum payment on a credit card. VTB, for example, includes the following amounts here:

• 3% of outstanding debt by the last business day of the month;
• a set of interest for the previous billing period in accordance with the card tariff.

The required amount should be paid before 18:00 on the 20th day of the month following the reporting one. If the client wants to save a little on interest, it is worth using the grace period, which is 50 days. If you return the money to the card within this period, then no interest will be accrued.

If you forgot to repay the debt within the specified period, but have a debit card of this bank, the financial institution will try to withdraw funds from there. In the event that this fails, the bank will be forced to charge a pen alty.

3-5 days before "X hour" the bank sends its customers a reminder about the amount of debt, the minimum amount of funds and the need for their timely payment.

Tinkoff

If you want to have such a payment "plastic", be prepared to pay a little more. The minimum payment on a Tinkoff credit card is calculated individually and can reach 8%. In this case, the payment amount cannot be less than six hundred rubles. This means that even if you spendless, you still have to pay.

It is highly desirable to make payments on this card on time. Otherwise, pen alties will be applied to the violator.

• for the first time, a financial institution will punish you with 590 rubles;
• secondary violation will result in a fine of 590 rubles. + 1% of the actual amount owed;
• those who are caught in violation of payment deadlines for the third time will part with 590 rubles. + 2% of the debt.

Savings Bank Subtleties

The minimum payment on a Sberbank credit card is calculated based on the final amount of the debt. Most often, 5% of the total amount of debt is calculated. This figure is the amount of the smallest payment that must be made to the card by a certain date. Sometimes, however, the bank applies an individual scheme and sets a personal percentage for a particular client.

If by the end of the period specified in the contract, the money has not been received on the credit card, the bank considers the obligations unfulfilled and charges a pen alty of up to 37%.

How and where to find out the exact amount

How do you know the minimum payment on a credit card? There are several options here:

• First of all, you can contact any branch of your bank. Don't forget to take your passport, otherwise it won't work.
• If your credit institution provides the opportunity to use Internet banking or special mobile offers, all information can be obtained without leaving yourat home. Just turn on your computer, go to your personal account page on the bank's website and get all the necessary information.
• Connect SMS-informing. Today, many banks provide such an opportunity. This way you will always know exactly when and how much you need to deposit.
• To find out what is the minimum credit card payment you need to make this month, you can call the bank's hotline. After talking with the operator and identifying yourself as the owner of the card, you can ask him all the questions you are interested in. Sometimes the system provides an opportunity to switch the conversation to tone mode and follow the prompts of the system.
• Many financial institutions provide the opportunity to connect a monthly e-mail. A written notification will be sent to your e-mail with details of card expenses and the amount of the minimum payment.

If none of the methods suits you, or if you doubt the accuracy and correctness of the indicated amount, you can make the calculations yourself.

Debt interest calculation

If you have a calculator and a loan agreement, you can calculate the minimum payment yourself. First you need to know what it consists of:

• principal amount;
• interest accrued for the use of money;
• fine or interest, if any.

There are 2 main options for how to calculate the minimum payment forcredit card:

• percentage of existing debt;
• according to the amount actually spent by the customer.

First, consider the first option. This method is used by many banks, it is very popular.

For example:

• the card has a spending limit of 100 thousand rubles and a rate of 15% per annum;
• over the past month (30 days) the client spent 23 thousand rubles;
• the contract provides for a minimum installment of 6% of the outstanding amount.

Given all these parameters, calculating the amount is quite simple:

• 23,000 x 6%=1,380 - the amount of the principal debt;
• 23,000 x (20%: 365 x 30)=378 - accrued interest;
• 1 380 + 378=1 758 rubles – minimum payment.

How much you take, so much put

This method of credit card repayment is the most primitive and understandable for owners. Everything is extremely simple here: before the end of the month, you must return to the card account the entire amount spent in the previous period, as well as pay interest on the use of borrowed funds.

If we use the data of the above example, it looks like this:

• 23,000 - the amount spent in the previous period;
• 23,000 x (20%: 365 x 30)=378 - accrued interest;
• 23,000 + 378=23,378 rubles – the full amount of the next installment.

After making the payment, the client reopens the limit in the amount of 100 thousand rubles and can again use the credit"plastic".

You can't count yourself

Although it seems that there is nothing complicated in the calculations, in practice it turns out that it is not always possible to correctly calculate the amount of the minimum payment on your own. Many banks set a grace period, such as 55 days, during which no interest is charged at all. In this case, it is extremely difficult to calculate everything yourself. After all, you need to track each expense, correctly calculate the grace period for it and determine from which date you need to accrue interest.

If you withdraw cash from the card, the percentage will also change, most often it becomes higher. If you paid with a card at an ATM of an institution that is not a partner of your bank, you will most likely be charged an additional commission. There are also many other subtleties.

For this financial institution, entire departments are organized, where everything is counted and controlled by automation. Therefore, if for some reason you doubt the correctness of the calculated amount of the minimum payment, the easiest way is to contact the bank and request a detailed printout with the calculation. The manager will explain in detail how and where each extra, in your opinion, penny came from.