Why You Should Avoid Only Making Minimum Credit Card Payments

It is a fact that the vast majority of Americans today spend more money on their credit cards than they should. Most people are more concerned with having the latest clothes or gadgets than keeping control of their personal finances. When you choose to live like this, you can easily find yourself in a situation where you have a large amount of debt.

Many Americans also make the mistake of only making the minimum payments on their credit cards. Some may simply not make enough money to pay more than this, or may choose to procrastinate about making payments towards the principle. In any event, statistics show that minimum payments generally only make up about 4% of the total amount owed. The percentage was originally at 2%, but concerns in the banking industry about the debt level of US citizens has forced them to increase the amount of the minimum payments.

Even with this percentage increase, it can take the consumer many years to pay off their credit cards if they only make the minimum payments. It is critical that consumers make large payments on the principle in order to bring down the amount of money they owe. If you don't do this, you could find yourself making payments for the majority of your life. There are a number of things you can in order to pay off the principle. Statistics show that the average American owes about $9,000 at 14% interest. If this describes you, it would be best if you stopped using your credit cards immediately.

While this may sound simple, some people make things worse by adding more money onto their credit cards. Once you stop using your card, you will next want to transfer the balance from the high interest credit card to a card which has a much lower interest rate. Credit cards which have a 0% interest rate will allow you to only make payments towards the principle. This should allow yout to concentrate your resources on paying off the principle while avoiding the interest. If you are responsible, you should be able to pay off the credit card within a reasonable time frame.

My advice for those who have multiple high interest credit cards is to get rid of them. It is best to have only one credit card, and it should only be used when you have an emergency. Being disciplined with your finances is one of the most important factors in staying debt free and becoming financially successful.

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