The Downside of Credit Card Minimum Payments
The credit card minimum payment indicated in your monthly bill is a small amount compared to your actual expenses. As the name implies, it’s all you have to pay each month. That’s what credit card companies want you to think. Your minimum payment covers just a little bit more than the interest expense of your loan.
If you keep paying only the minimum amount required each month, it will take you forever to pay the actual principal. If you continue using your credit card, your debt builds up over time without you realizing it even if you faithfully pay the minimum amount.
Watch this short clip from Total Debt Relief for a visual explanation of your credit card debt.
It is important to pay more than the minimum payments of the credit card bill to keep your debts in check. If you find yourself juggling several credit card minimum payments already, increase the payments on only one credit card first (usually the one with the highest interest rate). In this way, you’ll finish off the first debt faster and you can move on to the next debt.
You can find more information on how the minimum payment works here.