Make Minimum Payments
If you have a credit card, or multiple credit cards, then you’re probably familiar with the term minimum payments. At Debt Consolidation Dallas, Texas, we provide advice and guidance on how to manage your credit card debt to reduce its impact on your finances – and one of the significant pitfalls that people fall into is the minimum payment trap. We can provide expertise on this matter, eliminating the chance that you’ll fall prey to this insidious mechanism – and this can save you a lot of money and stress in the long run. For further details on this service provision, just read on below. Of course, if you’d like a more detailed run-through, our customer service agents are ready and waiting to offer you clarity.
What is are Minimum Payments?
It’s likely that if you’ve ever used a credit card, you’ll be familiar with the term minimum payments. This is basically the minimum amount that you need to pay on the credit card debt that you owe, and of course, if you don’t make a payment, this is going to both impact your credit score and likely cost you money in late payment fees. Minimum payments always cover the interest that you owe, plus some level of the base debt, so if you make minimum payments, your debt will definitely go down to an extent.
The Dangers of Minimum Payments
Now, you might be thinking, if the debt is going down, what’s the problem? After all, by making a minimum payment, you’re giving yourself more spending power than you would have if you decided to pay back more. But this is short term thinking – and incredibly harmful. The significant danger with minimum payments is that by choosing to only give them a little of what you owe, you’re staying in debt for longer – and that means that you’ll end up spending more money on the interest payments too. This is a particularly harmful form of debt, because it’s subtle enough that people don’t realize the trick that they’ve fallen for until long after they’ve been damaged.
If you’re juggling multiple credit card debts, you’ll also have numerous minimum payments to handle, and it might be that you can’t pay off more significant amounts without sacrificing making the minimum payment on one or more of the debts that you owe – a less than ideal situation. Our debt management specialists are capable of coming up with debt relief strategies to give you the most effective route out of the situation – they do this by calculating which payment structure will ultimately lead to the lowest amount paid at the end of the process.
While it’s clear that minimum payments are a dangerous mechanism, and that you need to try to pay beyond the minimum to decrease the amount that you’re spending on interest, it’s also critical that you do make minimum payments where at all possible. As with any missed loan or debt payments, there are serious implications for your credit if you don’t get on top of this mechanism.