When money is tight and you have a lot of debt in Tennessee that you are working to pay off, it may be tempting to only pay the minimum payment each month on your credit card. Indeed, if the minimum payment is all you can afford, then paying that amount and doing so on-time may help you maintain a decent credit score. However, if you can afford to pay more than the minimum, you may want to do so for a few reasons.
According to Wise Bread, how much of a balance you maintain on your card can affect your credit score. Typically, your score will be negatively affected if your balance is more than 30 percent of your available credit. A lower credit score can then prevent you from gaining access to more credit for things such as a mortgage or car loan. Therefore, paying more than the minimum amount each month in order to keep your score below that 30 percent threshold may benefit you in the long run.
In addition, only paying the minimum amount not only prolongs how long it will take you to pay off the debt, you will also end up paying a ton more in interest. Some people may find that only paying the minimum will keep them in debt for many years and end up costing them thousands. Even if you can only afford a few extra dollars over the minimum month, you will save money over time.
Finally, the amount of your minimum payment is not set in stone and may fluctuate depending on if you are continuing to charge things to the account. As your balance increases, so does your minimum payment. Plus, since the interest rate is based on your entire balance and not individual purchases, continuing to use your card will cost you more in interest.