Why You Should Not Just Make Minimum Payments
Why You Should Not Just Make Minimum Payments
A lot of people fall into the trap of making minimum payments. They figure that they are perfectly fine as long as they are making minimum payments on the credit cards. In a sense this is actually true. After all, by paying the minimum amount required every month on time, you won't be getting charged any late fee. It will definitely not affect your credit score adversely. On the other hand, you should realise that just paying the minimum amount on your credit card bill has other negative short and long term consequences on your finances.
One of the most obvious and easily felt consequence of just paying the minimum monthly required payment on your credit card bill is on your available credit limit. If you do not immediately pay off the entire outstanding balance on your credit card, what will happen is that your credit limit will decrease each time you use your card. While this poses no problem most of the time, it can be a problem if you are in need of emergency cash only to realise that you cannot make a money transfer because do not have sufficient credit left to cover your needs. If you wish to be able to keep on using your credit card regularly, at least make sure that you pay more than the minimum payment, if not the entire credit card balance.
Aside from decreasing your access to easy credit, a more serious impact to your finances would be additional cost to borrowing incurred by the outstanding credit card balance on your account. What you may not realise is that even if you are not charges penalties or late fees when you make the minimum payment, you will be charged interest on the balance left on your credit card, which you will see on your next statement. Depending on your credit card, interest can even be charged on the entire balance, including not just the outstanding balance but also the balance from new transactions. If you wish to save money, this means that you should always keep the outstanding balance on your credit cards to a minimum. Better yet, zero out your balance by the due date.
Lastly, while there is no direct impact on the amount of money you will be paying out, just making the minimum credit card payment regularly will affect you in terms of your spending habits. In fact, it is already a reflection of how well you are managing your finances. If you wish to be financially successful, you will be making wiser decisions, such as paying off your credit card bill fully and on time each time. Do not get into the habit of putting of paying bills and loans in order so that you fulfil some other want immediately. If you are already in that habit, it is time to get out of it and stop paying just the minimum. Online gift shopping at its best! How to Buy Mephedrone Benefits of shopping online for cheap Mediterranean cruises The advantages of shopping online for Gulet cruises Should I Buy an Amazon Kindle How to save online using shopping robots Free Apple I pad the only legit compay that you can get it from Buy Sarees online shopping is the great way Buy your firm seen in the harder Littleton Location Online Gift Shop: The Ultimate Shopping Convenience With Cheap Online Shopping Small Things Are No Small Anymore Concerns About Online Shopping What is the Best Way to Buy Tramadol?