Why You Should Avoid Minimum Payments Each Month + Ways to Pay More<\/p>\n\n\n\n
In order to maintain good credit, one of the most important things you can do is to pay your credit card payments on time each month. It may seem like a good idea to only get the minimum payment covered, possibly if you\u2019re low on money at the time. While it\u2019s alright to make minimum payments every so often, they can actually end up doing more damage long term. <\/p>\n\n\n\n
The minimum payment issued by a cardholder is based on the current balance of a card and its rate. The amount of the minimum payment may vary each month, depending on the balance and any additional fees or charges from the period before. <\/p>\n\n\n\n
3 ways a minimum payment could be calculated:<\/p>\n\n\n\n
In order to avoid further damage to your credit in the long run, check out the major risks of only making minimum payments on your credit card each month.<\/p>\n\n\n\n
When you carry a balance on your credit card each month, you\u2019ll be required to start paying interest charges. The problem becomes even bigger when you continue to charge the card, and the amount you will have to pay each month along with interest charges will only increase. If you\u2019re curious about your own interest charges and how significant they might be, divide your card’s annual percentage rate<\/a> by 12 and then multiply that number by your average balance.<\/p>\n\n\n\n For example, if your card has a 21% APR, your monthly interest rate would be 21% divided by 12. Finally, multiply that by the balance you\u2019re carrying! Overall, the lower balance you have on your credit month to month the better. Start paying more towards those payments and enjoy having less debt. <\/p>\n\n\n\nCredit Scores Will Be Damaged<\/h3>\n\n\n\n