As a cardholder it is your duty to know the meaning of the minimum payment of a credit card. This will prevent you from incurring default or over-indebtedness due to improper use of your card.
The minimum payment is the lowest payment required by the lender to not declare your default. The default or financial delinquency is a state that implies that you are not fulfilling the payment obligations acquired. This means a macha in your credit history, which can cause you many future inconveniences, including the denial of other credits.
Note that the minimum payment is the smallest amount you can cancel, so you can pay more than that. In fact, it is recommended that you always cancel more than that amount, to reduce interest payments.
How is the minimum payment of a credit card calculated?
The Superintendency of Banking, Insurance and Private Administrators of Pension Funds of Peru (SBS) determines how such payment is calculated. For the calculation of the minimum payment, the two payment methods used by the card users are used:
- Purchases made in fixed installments established at the time of payment.
- Acquisitions made in a single installment, called revolving debt.
How is the minimum payment of a credit card used?
The SBS has established regulations for the use of the minimum payment that benefits the user. The bulk of the minimum payment is dedicated to the cancellation of the revolving debt. In this way, priority is given to the payment of the type of debt that generates the greatest interest.
However, it is still not convenient to cancel only the minimum payment of the credit card. If you use that strategy, you will only get your debt to increase constantly over time.