Credit Cards Key » CreditCardsKey » Credit Card Calculator » What happens when you pay the minimum payment on your credit card?

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  #1 (permalink)
: does the balance ever go down even when you pay it on time every month?

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  #2 (permalink)
: It will go down, but just barely. 90% of that minimum payment just goes towards interest.
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more..
  #3 (permalink)
: yes but very slowly
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  #4 (permalink)
: You're basically just paying interest without making any progress lowering the principal balance
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  #5 (permalink)
: You do exactly what the credit card companies want you to do! They are making 18-25% interest, so they want you to continue to make purchases and only make the monthly minimum payment. However, I think you know where that leads....
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  #6 (permalink)
ACE
: If you only make the minimum payment, the period for paying the remaining balance would be extended. Interest (highhhh) will be charged on the balance and will be added to your next statement. Card companies also impose a finance charge for late payment. You should make it a habit to pay the statement balance in full by the due date every time to avoid paying high interest and late payment penalty.
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  #7 (permalink)
505
: it really depends on your APR -- i.e., anywhere from 8.25% to 25%. If you are paying the minimum then you are essentially paying the bulk of interest and a small portion of the principal. You should try to pay above the minimum payment or if you have good credit then try transferring your balance to a low interest credit card (and watch out for transferring fees if you do so -- some companies charge $300).

Also, your interest rate may be variable. That is, for example, an APR of 12% can change upwards b/c the credit card company will add a bank rate (technical term is LIBOR) plus the 12% -- so you will end up with an APR anywhere between 13-15% every month (depending on what the bank rate is for that month)

The best way to tackle credit card debt is to get a low fixed rate (not variable) and pay above the minimum amount so that you are tackling the principal rather than wasting your money on interest. Unfortunately, credit card companies have become stricter with their lending standards and so it will probably be difficult to get a low fixed rate in this economy w/o an excellent credit rating.
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  #8 (permalink)
: It depends on the total balance.
If your balance is high like several hundreds or thousands of dollars, by paying the minimum you'll never pay the bill off.
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  #9 (permalink)
: If you do not charge anything new, the balance goes down slightly. Very slightly. Not enough to reach zero in a reasonable amount of time.

If you pay more than the minimum, it goes down faster.

If you charge anything new, then the balance goes up (obviously).
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  #10 (permalink)
: you will pay for the remainder of your life

save what you would pay as a minimum payment till you have enough to get what you want to buy. Way cheaper in the long run and more satisfying..
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