How Does My Credit Card Minimum Payment Affect My Credit Scores?

A credit card minimum payment is the lowest amount that the bank will take as payment towards your account every month. Paying the minimum not only allows you to maintain your credit line, and keep your account open, but also helps you buy more time before you have to pay more towards your total balance. But unfortunately, if you carry a high balance, then paying just the minimum every month can cost you higher interest fees and even damage your credit rating. Here are some tips to help keep your credit card payments affordable:

Make your credit card minimum payments. The minimum should be paid on an everyday basis, not just when there is some money in the account. Many people find that paying the minimum amounts every month only allows them to maintain a small amount of their principal balance. While the principal is usually higher than the interest rates, if you only pay the minimum amount it will only keep your account from growing. Once the balance starts to increase you will be paying more each month and that can quickly get out of control.

Always pay more than the minimum amount. When you make a minimum payment by the credit card company will report your balance as available to the lenders. With any type of debt, the more you are able to pay monthly, the better your financial situation will appear to your creditors. And if your credit card minimum payment amounts to less than the outstanding balance then the credit card company will receive less payment each month than the balance owed. This means that they will be more likely to reduce the interest rates on your account or at least not report your balance as being delinquent.

For this reason, it is a good idea to avoid using the calculator provided by credit card companies. Not all credit card companies will calculate your minimum payments correctly. Some of them will include a late fee in the equation, while others will not. Using the calculator provided by the credit card company may give you a general idea of how much you will pay, but it will not take into consideration the number of your late fees. You will need to take into consideration any fees that you will be charged and then add those to the amount of your minimum payments.

The other thing that you should watch for is how your credit scores will be affected if you have a high minimum payment. While having a high minimum payment may seem like a good idea because you think it will allow you to pay off your debt more quickly, if your credit scores are low the lenders will see this as you not being responsible with your bills and this will lead to higher interest rates on your credit cards. As mentioned above, you want to make sure that you do not accumulate enough debt so that you can afford to make the lower minimum payments. It is better for your credit scores to pay off your debts sooner rather than later.

Finally, you want to make sure that you don't get into debt in the first place. If you have too many credit cards and you cannot keep up with the payments, make sure that you cancel them altogether. If you cannot be trusted to handle your credit card debt alone, you need to let a professional handle it. Many people think that they can handle their credit card debt by themselves but it is just too easy to get deeper in debt and harder to get out of it. Make sure that you understand all of the details about credit cards so that you know exactly what is expected of you. If you are already deep in debt and struggling to pay off your credit card debt, then make sure that you take action as soon as possible.