Don’t slip up and forget a credit card bill when the balance is almost paid off. A late fee could be larger than your minimum payment
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Dear Let’s Talk Credit,
I have an outstanding balance of $60 to be paid toward my credit card, but I can only pay the minimum amount due of $25. If I make this payment would the $25 be deducted from my principal loan amount or would I still owe the credit card $60 and the $25 is just for any interest? — Suleman
Credit card issuers do not all set minimum payment requirements the same way. Many charge a minimum payment of $15 or $30; or 1 percent of the total balance (whichever is greater), plus interest charges and any fees.
When using credit cards, it is a good idea to have a plan in place to pay off balances in full or within 90 days. Doing so will save you money in interest charges, and will hopefully keep you from using credit to extend your income.
If you do, for some reason, increase your balance on this card and your minimum payment increases as a result, you must pay at least the minimum amount due each month. If you make a payment less than the minimum amount due, the card issuer will consider it a late payment and will likely charge you a late fee of $25. If you do not make at least the minimum payment due for 60 days or more, your card issuer may increase your interest rate to the default rate of 29 percent or more.
Let’s keep talking!
See related:Feds cap late fees at $25