Maria Adams, Credit Cards Moderator
@m_adams
If you make more than the minimum payment on your credit card, you will save money on interest, improve your credit score, and reduce the amount of time it will take to pay off your debt. On top of that, if you pay off the full statement balance on your credit card each month, you can avoid interest charges altogether.
If you make only your credit card’s minimum payment by the due date, you will avoid late fees and penalty APRs. However, any unpaid balance carried between months will begin to accrue interest.
What Happens if You Pay More Than the Minimum on a Credit Card
- You’ll pay less in interest.
Unless you’re carrying a balance on a credit card with an introductory 0% APR, most of your minimum payment goes toward interest charges. So, you’ll owe less interest in the long run if you pay more than the minimum payment. Moreover, you’ll avoid interest charges altogether if you pay the balance in full by the due date every month. - Your credit will improve.
Paying more than the minimum amount due will reduce your credit utilization, which is good for your credit score and will make it easier to get credit in the future. Plus, a low credit utilization ratio frees up more of your available credit for emergency use. It’s best to maintain a utilization ratio below 30% for these reasons. - You’ll pay off your balance in less time.
When you only make the minimum payment, it can take a long time to pay off your balance in full. New interest charges accumulate daily, and minimum payments only cover a very small percentage of the principal balance.
You can calculate how long it will take to pay off your balance, and how much it will cost you in interest, using WalletHub’s credit card payoff calculator.
People also ask
Will I get charged with interest if I make the minimum credit card payment?
Yes, you will get charged with interest if you make the minimum credit card payment only. Paying the minimum amount required each month merely keeps your account in good standing, which saves you from credit score damage but not from interest charges. The only time you wouldn’t owe interest on a balance that remains after paying the minimum is during a card’s 0% introductory APR period. But without a 0% APR, you can only avoid interest if you pay off...
read full answer by WalletHub, Financial CompanyHow much should I pay on my credit card each month?
You should pay off the full statement balance on your credit card each month to avoid interest. At the very least, you need to make your minimum payment by the due date to avoid late fees, penalty interest rates and credit score damage. This amount is usually around $20 to $35, or 1% to 3% of your statement balance, whichever is greater.
Paying only the minimum mostly covers interest and won’t do much to lower your balance....
read full answer by Theresa Chalfant, WriterDoes paying the minimum hurt my credit score?
No, making just the minimum payment on a credit card does not hurt your credit score. Making your minimum payment on time actually does the opposite, as positive information is reported to the credit bureaus every month you do that. The exact amount you pay doesn’t factor into the payment history portion of your credit score. It’s simply noted that you’ve made a payment on time.
Although there’s no direct connection, only paying the minimum amount...
read full answer by Christie Matherne, Credit Card WriterDid we answer your question?
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