Some credit cards may define the minimum payment as "X% of the balance plus interest" - especially cards where the interest rate is allowed to change. This percentage will usually be between 2% and 5%. So, to ensure that each payment includes interest plus some portion of the principal, the minimum payment is defined as a percentage that is greater than the monthly interest rate. Percent of BalanceĬredit cards are a type of revolving line of credit that don't have a specific amortization period defined. If your interest rate was 18%, then the monthly interest rate would be approximately 18% / 12 = 1.5%. The basic calculation for the monthly interest-only payment is: But, if you only only pay the interest month-to-month, you'll never pay off the credit card. This is the minimum possible payment that you could make to avoid having your balance increase. Check the fine print on your credit card agreement to determine how your credit card company defines your minimum payment. The minimum payment might also be defined as the interest plus a percentage of the current balance. Monthly payment for a loan with with terms specified as arguments in A2:A4, except payments are due at the beginning of the period.Īmount to save each month to have $50,000 at the end of 18 years.The minimum payment on your credit card is usually either a percentage of the current balance (2% - 5%) or a minimum fixed dollar amount (like $15.00), whichever is greater. Monthly payment for a loan with terms specified as arguments in A2:A4. If you need to, you can adjust the column widths to see all the data.
For formulas to show results, select them, press F2, and then press Enter.
ExampleĬopy the example data in the following table, and paste it in cell A1 of a new Excel worksheet. Tip To find the total amount paid over the duration of the loan, multiply the returned PMT value by nper. If you make annual payments on the same loan, use 12 percent for rate and 4 for nper. If you make monthly payments on a four-year loan at an annual interest rate of 12 percent, use 12%/12 for rate and 4*12 for nper. Make sure that you are consistent about the units you use for specifying rate and nper.
The payment returned by PMT includes principal and interest but no taxes, reserve payments, or fees sometimes associated with loans. The number 0 (zero) or 1 and indicates when payments are due. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0. The future value, or a cash balance you want to attain after the last payment is made. The present value, or the total amount that a series of future payments is worth now also known as the principal.įv Optional. The total number of payments for the loan. The PMT function syntax has the following arguments: Note: For a more complete description of the arguments in PMT, see the PV function.
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