Financial Counseling Certification Program (FiCEP) Practice Exam

What is the term for the minimum amount a cardholder is required to pay each month?

1. Total balance

2. Minimum payment

3. Required payment

4. Standard payment

The correct answer is: Minimum payment

The term for the minimum amount a cardholder is required to pay each month is the minimum payment. This amount is typically a small percentage of the total balance owed on the credit card or a fixed dollar amount, whichever is greater. Making at least the minimum payment is crucial because it helps avoid late fees and prevents damage to the credit score. Additionally, consistent payment of at least the minimum amount aids in maintaining a positive payment history, which is a significant factor in credit scoring. While options like total balance and required payment may relate to the overall amount owed or other terms, they do not specifically indicate the minimum payment obligation that cardholders must meet monthly. The term standard payment is not commonly used in credit card contexts and does not accurately represent the minimum required payment a cardholder must make.