How Your Credit Card Minimum Payment or Dollar Bill Is Calculated

In this world of intense competition and financial turmoil, credit card services has been used by worldwide specially by the middle class or wages people and even sometimes it acts as a true friend in your financial crisis. The scheme is developed in a way that financial institution also can make profit out of you and remember that at the end of the day, its all about of business. Banks or financial institution provide a choice to clear out all their dues of your credit card in a specific cycle within you minimum payment due date. The minimum payment due date is the date when the consumers can clear all the dues or at least a fraction of your dues need to be pay [minimum payment] within that date. Here we discuss three calculation methods by how How your Credit Card Minimum Payment or Dollar Bill Is calculated by banks or financial institution:

Method-1: Based on percentage

Suppose you have outstanding of $2000 in this cycle and you have cleared your previous statement cycles due without being defaulter or blacklisted. Your bank has fixed your minimum payment as 5% of total outstanding. Then your minimum payment in the current cycle will be $100.

Method-2: If Your Credit Limit is Crossed

Suppose you have a credit limit of of $2000 and you have made some transaction out of your payment network for which additional network sharing fees will be imposed on you [known as issuer fee]. Your transaction amount is around $1998 [Online/Real Time] and another $50 dollar is charged [network charge+other fees calculated in back Office System of your card issuer]. As  a result, your outstanding will be crossed your credit limit which is $2048. In this case, your minimum payment will be (2048-2000)+2000*0.05=$148 dollar. You need to pay the full over limit amount if your outstanding crossed your sanctioned limit and basically it depends on business logic. Your card issuer can stick to Method-1 in this scenario if it wants.

Method-3: If You Have Missed One Cycle or Previous Cycle Minimum Payment

Suppose you have an outstanding/dues of $2000 and your minimum payment is $100 in this cycle but you are unable to pay the minimum dollar bill in this cycle. In this situation, few fees will be imposed for not paying in the current cycle and your outstanding goes to $2100. In this scenario, your minimum payment in next cycle will be ($2100-$100)*0.05+$100=$200. Formula =[Current Dues- Previous Cycle MP]*Percentage+Previous Cycle MP.