Question

Are minimum payment requirements and monthly payments the same thing?

Answer 1

No. The minimum is usually lower than the monthly, generally speaking, but they don't always come into play for the same type of loan. For example a credit card will have both. Let's say you open an new credit card, and charge $500 in the first month. Your monthly payment (balance due) on the statement will be $500. The minimum payment may be $20. Paying the minimum only guarantees that your account stays in good standing and you won't be charged a late fee, but you will still be charged for interest for the unpaid balance.

Answer 2

Okay, because I have to do this assignment where I'm buying something (not actually buying it) and I'm stuck on the minimum payments, I have all the information like the price of the product is $1499.99 and the he minimum payment requirement is greater of $10 or 1% of balance, plus billed finance charges, plus any late fees, or it can also be 2.5% of balance if card issued by Chase.

Answer 3

@peachpi How would I figure out what the minimum payment would be?

Answer 4

You'd have to know numbers for all that stuff and add them together.
Previous balance =
billed finance charges =
late fees =

Or if the $1499.99 is the only thing on the card
1% of 1499.99 = 0.01(1499.99) = $15
$15 is more than $10, so the minimum payment is $15

Do the same for 2.5% if you're using the chase card

Answer 5

Okay, thank you!!

Answer 6

you're welcome

Answer 7

So if my monthly payments were $54.21 that wouldn't be my minimum payment requirement right? @peachpi

Answer 8

I'd say they were different. the minimum is $15 (or whatever else you calculated) and the monthly $54.21.

HOWEVER, this is what's throwing me. credit cards don't generally have a fixed monthly payment. they'll have a balance due, depending on how much was charged, and a minimum payment. Accounts with a set monthly payment (like car loans & mortgages), don't generally have a minimum payment because you've agreed to pay the same amount every month.

Maybe if I can get a look at the assignment it'll be easier to clarify.