A credit card with a minimum payment is not considered overdue. Credit cards are a common means of spending, but credit card institutions often allow the minimum payment if the full bill amount is not paid off on time.
1. Definition of minimum repayment
1.Definition: A minimum payment is the minimum amount that a credit card holder must pay at the time of repayment. It is calculated as a percentage of the total bill amount (usually 10%) according to the credit card institution.
2.Minimum allowable payment: The amount that the cardholder needs to pay by the repayment date is the minimum payment. If the cardholder pays the minimum payment, there will be no late record.
2. The purpose of the minimum repayment amount
1.Avoid Late Payments: The payment of the minimum payment prevents the cardholder from being late because the cardholder pays the minimum payment and is not considered past due, even if the full bill amount is not paid.
2.Maintain credit history: Timely payment of the minimum payment can maintain the cardholder's credit history. Credit history is crucial for applying for other loans, renting a home, or buying a vehicle.
3.Avoid penalties: Cardholders who fail to make the minimum payment or fail to pay the full bill amount on time may incur late fees and penalties.
4.Interest expense: Paying only the minimum payment will result in an interest charge, and the outstanding principal will continue to accrue interest. If the cardholder only makes the minimum payment but does not pay off the full bill amount, the lender will accrue interest on the remaining outstanding principal.
3. Precautions
1.Interest expense: Paying only the minimum payment will cause interest to continue to accrue on the remaining outstanding principal. Cardholders should pay the full bill amount whenever possible to avoid paying exorbitant interest charges.
2.Debt accumulation: Paying only the minimum payment can lead to an ongoing accumulation of debt as interest charges continue to accumulate. Cardholders should have a reasonable repayment plan in place and strive to repay the outstanding principal amount to reduce the debt burden.
3.Repayment plan: If a cardholder encounters financial difficulties and is unable to pay the full bill amount at once, they should contact the credit card institution in a timely manner and discuss the development of a reasonable repayment plan. Communicating and negotiating with credit card institutions can avoid late records and fines.
Only the minimum payment is not considered overdue. The minimum payment is the minimum required to maintain the credit card account specification and can avoid overdue records. Paying a minimum payment can help maintain your credit history, but be aware that paying only the minimum payment will result in interest charges and may increase the burden of debt. Cardholders should understand the definition and purpose of the minimum payment amount, and plan a repayment strategy based on their personal financial situation.