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Can I pay off my balance by paying the minimum payment?

On Behalf of | Jul 27, 2019 | Uncategorized

Credit cards can be wonderful if you use them carefully and make sure that you make payments to avoid going into debt. However, if you have a higher balance and cannot pay off the card at each billing statement, you always have the option of making the minimum payment. You may wonder, though, if paying the minimum payment will allow you to ever pay off the balance or if you will end up like others in Michigan with high credit card debt.

Credit Karma explains that the minimum payment option will allow you to eventually pay off your credit card debt, but it will take a very long time to do so. Part of the issue here is that when you pay the minimum payment, you get interest accessed to your account. This means that most of what you pay will just cover that interest. Very little actually pays the account balance. So, you are paying a small amount over time which barely chips away at the actual balance you owe.

Each credit card company has a formula for figuring the minimum payment due. Most often, it is a minimum amount or a percentage of your balance, whichever is higher. This can change from month to month if you add more charges or if something changes with your balance.

Due to a law passed by Congress, your credit card statement must include an explanation of how long it will take to pay off your balance when you only pay the minimum amount. This takes the guesswork out of things for you and makes it easier to see why you should pay more than the minimum whenever possible. This information is for education and is not legal advice.