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Do not trap yourself by paying minimum due of credit card

    Amit Bhatia
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    By Amit Bhatia
    Do not trap yourself by paying minimum due of credit card

    If you’re on a tight budget or having heavy debt, you may be enticed to make only the minimum due on your credit cards—but that could be a big blunder. Paying the minimum amount would not make you debt free or help an inch. So, please reconsider before you pay the minimum oncoming credit card bill as the important part of debt consolidation.

     

    1. Numbers of years it can take you to be debt free.

    Interest accrues and compounds would be on top of itself each billing cycle, and the longer you leave it as unpaid, the harder it becomes to pay it off.

    2. Sacrificing your financial progress by paying much in interest alone.

    If you do not pay credit card payment then, any reputable credit counselling company will be collecting a good interest fee on the payment.

    3. Risking your credit score

    By paying only the monthly minimum due, your credit score will be endangered.

     

    To conclude……

    Credit card score is calculated by one formula. 30% of the credit card score is determined by your credit utilization ratio. The closer you are to reach out your credit card limits, the higher your credit utilization ratio.

     

    You can start with the card that has the smallest debt amount and pay as much as you can on it each month until it’s paid off (keep paying minimums on the other cards). Then, pick the card with the next largest balance and do the same thing. Repeat this over and over again until all your cards are paid off. The logic with this snowball method is to gain small victories up front, you will stay motivated to tackle all your debts.

     

    If you’re facing more debts compared you can handle on your own, another popular option is to seek guidance from a Credit Counselling institution to save money and take steps to reduce your total debt. Managing your credit card debt a crucial part of debt consolidation strategies. Identifying the best debt consolidation strategy which can fit into your problem can be advised from most Credit consulting agencies. There is a reasonably good number of credit counselling agencies in your cities Toronto, Mississauga, Brampton, Vaughan, Hamilton, Scarborough or any other cities of Canada and uplift you financially.

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