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Home >> Lending >> Credit Cards
Making Minimum Credit Card Payment
If the minimum payment on a credit card is $200 and you only pay $100 each time, what recourse does the credit card company have?
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 Each time you pay less than the minimum payment amount, the credit card issuer has the option to declare your account in default. That could mean kicking up the interest rate, often to levels in excess of 20% annual percentage rate.
Depending on the language of your account agreement, the issuing bank could also shut down further use of the account, and could start collection proceedings, referring it to internal or external collectors. The bank could also report the delinquency of the account to credit reporting agencies (credit bureaus), thus potentially affecting your ability to obtain other credit, insurance, employment, or even housing.
In addition to all of that, the interest on the account is probably accumulating more quickly than your payments are applied. That is to say, if there is a $200 minimum payment, it's likely that the interest added to the account each month is more than $100. That will make it impossible for you to pay off the account at the rate you are making payments now. Contact the bank and try to complete a workout agreement that will eventually pay off the account.
Published on BankingQuestions.com 9/24/08
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