Almost every credit card will give you the option of making the minimum payment towards the balance that you owe on the credit card every month. This minimum payment is usually one to 4% of the total credit card balance. It is calculated by adding the interest rate as will as the finance charges together. Here are a few reasons why you should always make more than the minimum payment towards your credit card balance.
You will save money In the long run by making more than minimal payment on your credit card.
It is evident that by making more than the minimum payment every month you’ll pay off the debt sooner and save money in additional finance charge is that you’ll have to incur every month that you carry the balance of world.
You can pay the credit card debt sooner by making more than minimum payment every month.
Whenever you make only the minimum payment on the balance you’re only paying the interest and the finance charges. You can continue to make the minimum payment for years without reducing the original principle balance. For example it will take you more than 20 years to pay off a $5000 credit card balance at 14% APR when you only make the minimum payment every month.
Reduce the credit card balance quicker and use the money for other requirements.
you should reduce the balance on your credit card to provide room for other expenses on the card. You may need to use the card for some urgent reason in the future and not having the available credit on it because of the running balance may prevent you from doing so. It is also a good idea to clear up as much of your unpaid debt before planning to apply for a major line of credit such as a mortgage loan or an automobile loan. When your credit report shows your previous debts as being paid off or nearly paid off, they are more likely to consider you for further credit.