Legal Warranty Credit Card Minimum Balance

Credit Card Minimum Payment: How It Can Ruin You


Unexpected financial hardship? Need extra money in your pocket? There will always be a tempting reason to make the minimum payment on your credit card bill, especially if you are dealing with high balance accounts. Don’t do it; here’s why.

Save a penny, lose a dollar.

Minimum payments don’t save you money, they balloon your debt. When you pay the least possible amount, you buy yourself breathing room but at the expense of falling into a cycle of financial distress.

This is what happens when you only make the minimum credit card payment:

1- It takes you longer to pay your debt.

On a $10,000 maxed out credit card with 19% interest and a minimum balance of 3%, your monthly payment would be $300 per month.  At that rate, it would take you 258 months or 21 years to pay off your debt.

Luckily, in accordance to the Credit Card Act of 2009 credit card companies must include on statements how long it would take you to pay back your balance if you only pay the minimum.

2- You pay more interest.

The longer you take to pay off your debt, the more interest you pay.  Eventually, you start to pay interest on that interest, which is called compounding interest. You can avoid the debt spiral by paying more than the minimum.

3- It hurts your credit.

Paying the minimum payment on your credit card steadily increases the balance, dangerously approaching the credit limit. Maxxing out the credit limit month after month erodes your credit score.

You can also read our articles on the How To Get Good Credit and Statute of Limitation On Debt.

Paying the minimum is better than not paying at all but;

  • If you’ve been paying your debt for longer than 5 years
  • If the total debt is more than half your yearly income

It might be best to seek help. Contact us, no obligation.