Read the actual formula
Issuers can calculate minimums differently. A rule may combine a percentage of balance, interest, fees, past-due amounts, and a fixed minimum. The payment can fall as the balance falls, extending payoff when only the required amount is paid.
Statement estimates depend on no new purchases and specified payment behavior. New charges or rate changes alter the path.
- Balance component
- Interest and fees
- Fixed floor
- Past-due amount
Compare payment policies
Model minimum-only, fixed-dollar, and target-date payments using the same starting balance and rate assumptions. Show total paid and months to payoff.
A faster schedule must still fit cash flow. Missing a required payment can create fees, credit effects, and loss of promotional terms.
Reproduce the next statement minimum from the issuer's written formula and compare three payoff policies without new purchases.