Cost of Paying Only The Minimum On A Credit Card

If you carry a balance from one month to the next, you’ll have to pay interest charges. While that may have been okay in the past, this year interest rates will be more expensive. That means you’ll be paying more for longer, especially if you only pay the minimum balance.

Even a one percent increase can affect how much you’re paying back. The best thing you can do is get into the habit of paying the bill in full. How will a one percentage point interest rate increase affect what you’ll owe? It cost a lot. For example, if you owe a $5,000 credit card balance and the annual percentage rate is 14.99, it would take you nearly 14 years to pay it off by paying the minimum. Plus, you’d be paying an extra $3,361 in interest. A one percent increase would take you 15 years and cost $3, 761 in interest.

The best thing to do is pay your balance in full.

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