Paying the balance vs. paying the minimum on a credit card

When it comes to paying off your credit card balances, you have multiple options. It can be tempting to only pay the minimum. Why pay more if you don’t have to? If times are tough and you’ve been relying on your credit cards to help you pay other bills, it’s understandable if you feel you can only afford the minimum payment temporarily. Paying the balance in full, however, is best when you’re able. It may help prevent your credit score from lowering and can save you money long-term.

Paying the minimum on a credit card

While it may seem like only a small thing, it’s good for you to at least make the minimum payment. Doing so can help you avoid late fees and having your lender report a missed payment to the credit reporting agencies. This is vital to your credit health because on-time payments are one of the important credit score factors.

The minimum payment for credit card accounts can vary from month-to-month. It’s typically calculated in one of two ways: As a percentage of your outstanding balance plus new interest and fees or as a fixed amount, whichever is greater. For example, say a lender charges either 1% of your balance plus interest or $25. If your balance for a statement period is lower than $25, you’d simply need to pay the entire balance. It’s important to check your statements to understand the policy for your specific card and issuer.


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