When it comes to paying off your credit cards, you might be tempted to only pay the minimum credit card payment. Why pay the full amount if it’s not needed, especially if the funds can go to something else? But consistently only paying the minimum can have some detrimental long-term effects.
Keep reading to find out why you should consider paying off your total credit card balance.
Paying the Minimum
While making the minimum payment will ensure you avoid late fees and keep your credit score healthy, it won’t do much more for you. If you can only manage the minimum payment, you will still pay off your debt eventually, but it will take quite a while.
You need to consider your credit card interest rate when paying the minimum. When making a payment, only a percentage of the money you pay is going to go to paying off your debt. The rest of the money will go to interest and any other fees that may have been added.
Credit card interest rates are one of the main reasons it takes so long to pay off your debts. Once everything has been paid off, you’ll realize you paid so much more money due to the interest rate than what you initially spent.
Paying in Full
Paying off a credit card in full each statement period is undoubtedly the best option. This will allow you to avoid a lot of interest payments as you’ll be paying off your debt quicker. In addition, by paying off your credit card in full, you’ll also be helping your credit score (bonus!).
By making the full payment for each statement period, you’ll also start getting into the habit of making on-time payments to avoid any extra fees. These healthy habits will help you keep your debts low.
If you are struggling to pay off a credit card in full, you should consider what amount you are able to commit to paying. As long as you pay more than the minimum, you will still be reaping the benefits while keeping your credit in good standing.
Focus your energy on paying off your debt in full as this will allow you to start saving more money instead of paying bank fees and interest rates.
If you are struggling with paying off a credit card or just need help managing your credit card debt, you can take a look here for debt counselling. Asking for help when you need it is an important step in becoming financially independent and debt-free.
Paying Credit Card Balance Made Easy
Now that you know why you should pay off your total credit card balance instead of the minimum, you can go ahead and start raking in those benefits. Keep building healthy spending habits and chip away at that debt. Your hard work will pay off, just be patient!
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