Definition: The minimum payment due by the borrower on a loan or line of credit.
In special offers or non-traditional loans, this may be less than the interest that has accrued over the past month. If this is the case, you can experience negative amortization and owe more money than you did before you made your payment.
With credit cards, this amount may only barely cover the accrued interest. Which means most of your minimum payment will be used to cover the interest and less will be used to pay down what you owe, extending the life of your credit card bills.
If you can afford to do so, it is often better to pay more than the minimum monthly payment, to ensure that you are able to reduce the principal you owe on the loan.
See Also: Amortization, Negative Amortization
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