Why Does the Credit Card Company Set the Minimum Payment So Low?
Credit card companies set low minimum payments to promote on-time payments and prevent widespread defaults, offering financially constrained cardholders a manageable way to reduce their outstanding balances while avoiding late fees.
by Kowsalya
Published Oct 24, 2023 | Updated Oct 24, 2023 | ๐ 1 min read
Article continues below advertisement
Why Does the Credit Card Company Set the Minimum Payment So Low?
Credit card companies set the minimum payment at a relatively low level to provide their customers with a manageable option for making partial payments, thereby encouraging timely payments and reducing the likelihood of widespread defaults.
This approach allows cardholders facing financial constraints to make progress toward reducing their outstanding balance while also benefiting the credit card company by minimizing the risk of non-payment and late fees.
Related Articles
Quiz Questions On Insurance and Risk Management - 3
706 days ago
Quiz Questions on Credit Management and Awareness
707 days ago
Disclaimer : The above information is for general informational purposes only. All information on the Site is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on the Site.