Tuesday, May 01, 2007
Paying the Minimum Amount Due in Credit Cards
People who are paying the minimum amount due for their credit card purchases are probably thinking that your credit card company is being kind and reasonable by giving you low minimum monthly payments thus lowering your monthly expenses. If you think they are doing you a favor, think again because nothing is farther from the truth. The less you pay the longer you have to pay your bill and the more you have to pay them interest longer. And getting into a huge credit card debt is the last thing people need in these times of uncertainty.
The minimum amount due is the lowest amount a credit card holder needs to pay to not be considered a delinquent borrower is an way the credit card company siphon your money away. By always paying the minimum due. You are actually paying them in compounded interest rate the longer it takes to to completely pay what you owe. If possible, always pay more than what is the minimum amount due. A better way to retire debt is to set aside a bigger but manageable amount for your credit card bill payment every month. Since there are few loans out there that has a big of an interest rate than a credit card.
On a personal note, I would like to commend Citibank, who in their last billing statement to me is stating that they will increase the minimum amount due for credit card holders to help them settle their bills faster. Although this might be a bitter pill to swallow for some, trust me. In the end it will be saving you more money in interest payments that can otherwise be used for something more important than paying interest for your loan.