Terms

• Credit card companies have minimum monthly payments as low as 2 percent. Some credit card companies have increased the amount to 4 percent. According to MSN moneycentral.com, more will follow this trend.
  
  

Purpose

• A minimum monthly payment was designed to help customers make affordable payments for the goods and services they purchased.
  
  

What It Covers

• When a minimum monthly payment is set up by a credit card, it should cover the interest, past due amount and any fees. A portion of the payment also should go toward your principal balance. This is why credit card companies have increased the minimum payments.
  
  

Warning

• If you pay less than your minimum payment by your due date, your payment will be considered late. You also will receive a late charge and possibly an interest rate increase.
  
  

Potential

• If you make large payments, or more than your minimum payment, your minimum payment could decrease. That's because your minimum payment is a percentage of your outstanding balance.