Definition
The smallest amount you must pay on a credit card by the due date to avoid a late fee and keep the account in good standing.
What it means
The minimum payment is usually a small percentage of your balance plus interest and fees, or a flat amount such as $25, whichever is higher. Paying only the minimum keeps the account current but makes debt last a long time because most of the payment goes to interest. Federal rules under the Truth in Lending Act require your statement to show how long it would take and how much it would cost to pay off the balance if you make only minimum payments, and what you would need to pay to finish in three years. Missing even the minimum can bring a late fee, a penalty APR and a negative mark on your credit report once the payment is 30 days late. Payments above the minimum generally go to the highest-rate balance first.
Example
On a $5,000 balance at 22% APR, a minimum of interest plus 1% of the balance starts around $142 and can take more than 15 years to pay off. A fixed $200 payment clears it in about 3 years.
Illustrative numbers only. Your situation will differ.