When you open a credit card, you’ll also have a minimum payment each month along with it. Many people pay only the minimum on their card, which can in turn make the lifecycle of paying off the credit even longer. When you only make the minimum payment, which credit card companies are relying on you to do, then you won’t be chipping away at the principal interest of the loan that the credit card is accumulating.
It’s recommended you try to pay more than the minimum payment on your credit cards in all cases. Even if it’s just $10 or $20 more each month, it will help you make a dent in the principal interest over time. It’s recommended to pay your balance off in full each month if you can.
For most people, paying just the minimum becomes part of a cycle of only paying the minimum over the course of months or years. You begin to think, “Well, I’m getting by just fine,” instead of taking a hard look at the interest rates and the accumulation of interest over time. Instead, try paying off the full balance each month, minimizing the use of your credit card as much as possible, and only charging what you can afford to your credit card.
Of course, making a minimum payment isn’t always a bad thing. In fact, it’s helpful for the average American because it means that can handle an unexpected expense or an emergency using a credit card if they absolutely have to. But in an everyday sense, it’s better not to rely too much on a credit card and to keep your total balance low.