minimum payment
Also called: minimum payment
The smallest amount that must be paid so a credit card is not considered overdue.
What it means
The minimum payment is the smallest amount a credit card holder must pay so the bill is not considered overdue. Usually it is only a small portion of the total bill. The remaining unpaid bill will be charged interest and carried over to the next month's bill.
Why it matters for families
Paying the minimum payment does avoid late fees, but it does not pay off the debt. Interest keeps running on the remaining bill, so the total debt can take a long time to go down. Families need to know that paying the minimum is not a payoff strategy, only a delay.
Example
For example, a total credit card bill of Rp2 million and a minimum payment of Rp200 thousand. If only Rp200 thousand is paid, the remaining Rp1.8 million will accrue interest. The next month's bill grows, and if this continues, the debt is hard to pay off even though payments are made every month.
Common misunderstanding
Many people feel safe because they have paid the minimum payment on time. In fact, the principal debt is still large and interest keeps running.