Minimum Payment Definition: A minimum payment refers to the smallest amount that can be made on a loan or credit card without penalty or damage to personal credit. This amount is normally disclosed on a monthly credit card statement, along with a due date on which the payment is due.
As long as this minimum amount is paid on or before the due date, there are no penalty charges. Minimum payments are common with lines of credit, credit cards, and student loans. While this small payment is all that’s required, interest will continue to incur on balance owing, and making a larger payment to pay off more of the principal is often recommended.