Question

Which of the following statements about minimum payments is incorrect?
A) If you send in the minimum payment, you will be charged a late fee
B) Paying the minimum means you are only paying off a portion of your total debt
C) You will still pay interest on your balance if you submit the minimum payment
D) Minimum payments are typically only 2-4% of your total debt

Answer 1

Hi, consider the answer given below.

The statement which is incorrect about minimum payment is A If you send in the minimum payment, you will be charged a late fee

It is worth noting that the minimum is normally created in order to make you pay some amount every month. But not meant to pay off your bills.

Therefore we can say that the minimum payment is a percentage of your balance. Cover monthly interest and 1% of the balance.

Answer 2

Minimum payment is nothing but something that you need to pay on a monthly basis.

This does not mean that your bill is completely paid off.

The minimum payment is a small amount that is paid from your balance.

This minimum payment would include principle amount and interest (1%).

The minimum payments would be usually of 3%.

There are a few lenders who insist you to pay 5% of minimum payment of your borrowed amount.