The dynamics of credit cards can be confusing if we do not inform ourselves what is necessary and one of the points that usually confuses people has to do with the minimum payment. Month after month, your credit card account statement arrives and a smaller number appears next to the total amount to be paid. This is the minimum payment amount. That is, not to delay you, they tell you that you can cancel, at least, that amount.

But should it be used? If it is a smaller amount, why not pay the minimum every month and thus have more money available for other expenses? Next, what you should keep in mind to make a decision:

 

It is a valid option when you cannot make full payment

It is a valid option when you cannot make full payment

Basically, this option was created so that you do not fall behind in payments, but it is ideal that it be used only when you do not have enough cash to make the total payment. So, if you had an emergency or something got out of control, that’s where you can take advantage of the minimum payment.

 

It will take longer to get out of your debt

It will take longer to get out of your debt

The minimum payment covers, as the name implies, the minimum amount of your debt sufficient not to delay you. That is, more than anything else, they are commissions, interests and a small part of the capital. Consequently, it will take you much longer to cancel your debt.

 

Not a good image for banks

Not a good image for banks

If every month you meet only the minimum payment, you are giving a bad image because you show that you cannot cover the total amount of your debt and that you are spending more than you can pay.

 

You are paying a lot in interest

You are paying a lot in interest

Something you should not forget about credit cards is that the more you delay in canceling a debt, the more interest occurs. Then, that purchase that was in promotion and that represented a saving, does not come out as cheap as you thought, because the interests consume more money than you think.

The recommendation is that you use the minimum payment only in situations that truly require it and do not make it a habit that harms your finances.