Definition
Minimum Payment
The smallest amount you can pay on a debt to keep it in good standing.
The minimum payment is the least a lender requires each month to avoid late fees and penalties. On credit cards it is often just 1 to 3 percent of the balance plus interest.
Paying only the minimum keeps you current but stretches repayment over years and piles on interest. Paying anything above the minimum goes straight at the balance and shortens the payoff dramatically.