$1 Dollar Law Suit Prevention
Does a $1 dollar payment ensure law suit prevention from your credit card company? Learn the legal truth, plus other tips and advice to protect your personal finance from mistakes and fraud.
You may have heard, or perhaps you have told someone, that if you send at least $1 (one dollar) to your credit card company, they cannot sue you no matter how much money you owe them.
Unfortunately, that's false. The only truth to the statement is if your balance owed is actually only $1.
Most credit card companies calculate the minimum payment due as a percentage of the balance (typically 1-3%). Even if your balance is low enough that your minimum payment is calculated at $1, most credit card agreements have a 'minimum', minimum payment. For example, perhaps the minimum payment is 2% of the balance; or $5, whichever is greater.
Anytime you pay less than the minimum, you're in violation of your credit card agreement and the issuer considers your payment late. Your issuer can charge a late fee, increase your interest rate, refer you to a collection agency, chargeoff your credit card, and/or report the delinquency to a credit bureau. Typically they do all of the above.
Whenever you hear claims such as the $1 minimum payment, consult your credit card or loan Terms, or contact your credit card company or loan lender.
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