When most Tennesseans think of credit card debt, medical bills or holiday shopping might be the first culprits to come to mind. However, one tricky factor at play in the wallets of many is that of minimum payment traps. Some are aware that such methods of paying off debt can be risky, but there are times when a credit trap can seriously affect an individual’s wellbeing and overall quality of life.
Known infamously as the quick method of paying monthly credit card bills, minimum payments can be a wolf in sheep’s clothing. NerdWallet takes a look at this common method of addressing credit card debt, showing that minimum payments can ultimately prolong debt and could potentially place a black mark on one’s credit score. In addition, paying only the minimum balance each month could lead to higher interest rates. Although paying the minimum balance can help consumers avoid late fees, opting for this method on a long-term basis could prevent them from paying down balances. NerdWallet concludes the article by pointing toward further assistance for those who have paid only minimum balances for long periods of time.
National Credit Educational Services also comments on the pros and cons of paying the minimum balance on one’s credit card debt, adding that, despite tempting payment plans, saving money for consumers is not typically a credit card company’s top priority. As a result, countless Americans fall into a minimum payment trap, wading waist-deep into debt. NCES also encourages consumers to pay as much as possible on monthly fees — committing to even an additional $20 to $30 a month can make all the difference.