When you get your monthly credit card statement at the end of the month, you will be presented with a minimum amount due by a specific date in the near future.
Although you can certainly get away with making the minimum payments each month if necessary, here are some good reasons that you should pay more than the minimum.
- If you pay the minimum then it will take a long time to pay off the card. The minimum payment is usually a bit more than the interest incurred since the last statement so you will not see the total debt owed going down very much at all with a minimum payment.
- The longer you owe debt on a card, the more interest you will be charged in the end. Each month you accrue a bit of interest on every dollar that’s still owed and that is money that will eventually come out of your pocket or paycheck.
- You can get a better credit score by paying it off faster. Credit card scores are partially calculated based off how close your credit card debt balance is to the credit card limit. Someone who charges a lot to their card and struggles to pay it off naturally looks less trustworthy than someone who pays off everything they borrow at the end of the month.
- The more debts you pay off the less you have to worry about. If you’re a typical hardworking person then you may have or may need to take out student loans, car loans, and/or a house mortgage as well. The last thing you need when dealing with those other loans is a lot of money owed on a credit card. If you can pay off your card sooner rather than later then it may give you some peace of mind.
- You will have more credit available for emergencies. Remember that most credit cards come with a hard limit that you’re not suppose to breach. If you try to charge past the limit of a card then you might be hit with overcharge fees or have the card frozen from transactions until you pay down the balance. If you end up needing the card when you don’t have it available, then you might end up regretting not paying it down sooner.