If you only make the minimum payment on your credit card, then you could be setting yourself up for failure. It will take you a long time to get rid of your credit card debt. You will also end up paying a lot more in interest.
Making the minimum payment may seem like a good idea if you are struggling financially. You probably will not hurt your credit score because you are making the payments on time. However, financial experts still believe that this is a practice that should be avoided. They believe that you will end up putting yourself in a hole in the long run.
Courtney Nagle is a spokeswoman for the National Federation for Credit Counseling. She stated that while making the minimum payments is a cost-effective way to manage debt, it is not a good long-term solution. She recommends that people pay off their debt as quickly as possible so that they will have more breathing room in their budget.
Your interest will grow as long as you make the minimum payments. Kevin Gallegos works for Freedom Debt Relief. He stated that people should pay close attention to the minimum payment warning section of their credit card statement. It will show you how long it will take you to pay off your credit card if you just make the minimum payment. It will also show you how much you will end up paying in the long run.
You can boost your credit score by making the minimum payments. Your payment history is one of the main factors that determines your credit score. However, making the minimum payment may hurt your credit score.
Most people who only make the minimum payments have either maxed out their credit card or have come close to doing so. When you make out your credit card, your credit score will drop.