Should You Make Minimum or Bigger Payments?

Nothing can stop you if you want to over zealously use your plastics. But that’s just where the problem starts. When you lose control of your credit card habit, you get piled on with a mountain’s worth of debt. You’ll only feel the blow when you’re already faced with credit card bills and due dates.

Now don’t even think of skipping payments. ‘Pass’ simply doesn’t apply with credit card debt. If you get late on payments, your credit history gets affected. Your status slumps down to bad credit plus you get an additional burden which is the penalty charge. And, as if that’s not enough, this month’s bill will roll over to the next, together with another payment and interest rate. So pay your credit card bills either with the minimum or more.

At times when you’re overwhelmed with debt, paying by the minimum can greatly help in terms of clearing your pressures for the month and preventing surcharges. With little money required, you’ll now likely to afford paying every single bill. But minimum payment is only as good as first aid. Meaning your ‘real debt’ remains and it was barely dented.

Minimum payment is composed only of 1 to 2 percent of your overall balance. And as time goes, this minimum gets even smaller. So do this every single month and end up paying for that fine meal for a decade. Now imagine how much profit credit card providers will milk out of you. So as I have mentioned, minimum payment is only your emergency solution. The real cure would be paying more than the minimum.

So how much exactly is ‘more than the minimum’ payment? It all depends on how much you owe. But the trick is to pay off each of your debt in as little as three months and it must be on time. Doing so will get you out of debt completely. Paying off your debt immediately also results to a low credit card balance and high credit limit. Together with on time payments you’ll get the reward of a great credit score.

If you want to avoid penalty charges, then minimum payment is your easiest bet. But this will not rid you of debt completely; or, at least not for the next few years. But if you want to get out of debt, try taking a huge chunk off your debt monthly by paying more than what is required of you.