2 Shocking Downsides to Only Making Minimum Credit Card Payments

Written By Naazma Garcia
Mar 1, 2022


Many credit card users set their accounts to autopay their minimum payment and go on spending. Paying $25 or 1% to 2% of your balance every month sounds easy… because it is. That’s why 45% of millennials are only making their minimum payments. 

This set-it and forget-it attitude allows you to dodge late fees and keep your account in “good” standing… but that’s about it.

Unless you’re in a serious financial crisis and you need to save cash for a couple of months, only paying your minimum payment is a poor financial strategy that could end with DEVASTATING financial consequences: 

You’ll Pay A LOT of Interest Over MANY Years

Credit card interest charges are determined as a percentage of your outstanding balance. The larger your balance, the greater your interest charge.

By only making minimum payments, the total interest increases each month and your balance snowballs, especially if you continue making charges to the card.

Say you owe $10,000 in credit card debt with 15% interest, and you’re making a 2% minimum payment ($200) each month.

Here’s how many years and dollars you’ll spend before your card is paid off: 

That’s 35 years and $25,850.97 to pay off a $10,000 debt – and the $15,850.97 in interest is more than you owed in the first place!

Check out this online credit card calculator to calculate how much interest you’ll pay and how long it will take to pay off your debt.

If you take a look at the “Minimum Payment Warning” on your bill, you’ll find a table telling you how long it will take you to pay your balance by only making minimum payments. The longer you take to pay down your debt, the more interest you’ll rack up, and the more money you’ll end up spending. 

Your Credit Score Will Suffer 

The percentage of the credit you are using is known as your ‘credit utilization ratio’. This metric has a major impact on your credit score, which is why keeping a high balance is not a good idea.

The typical suggestion is to use less than 30% of your credit limit per card. But if you’re only making minimum payments, that means you’re using a larger percentage of your allowed credit, which will negatively impact your credit score.

Remember, a poor credit score will make it more difficult to qualify for loans and other credit cards. It can even impact your job prospects and your ability to rent an apartment. 

Can’t Afford to Pay More Than Your Monthly Payments? Ask for Help

Paying more than your minimum credit card payment is not only beneficial but critical to your financial health. However, some of us are stuck between a rock and a hard place and simply can’t afford to pay off more of our debt. 

Fortunately, there are consumer credit and debt relief solutions offered by companies like Americor. According to the American Fair Credit Council, debt settlement is the most consumer-friendly debt relief option for Americans overwhelmed by debt. Contact a certified debt consultant today to receive a free debt analysis. 

Click here to apply: https://apply.americor.com/new

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Americor provides debt solutions to thousands individuals and families all over the country. We’re a next-generation debt relief company with a proprietary platform designed to help clients get out of debt quickly. Together we’ll develop a strategy for you to enjoy a debt free lifestyle. Learn more about how Americor can help relieve the burdens of debt today.

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We provide debt resolution services. Our clients who make all monthly program payments save approximately 40 – 50% of their enrolled debt (average of 43%) upon successful program completion, before program fees. Fees are based on a percentage of your enrolled debt at the time of starting the program and range from 15%-25% of your enrolled debt. Programs range from 20-48 months. Clients must save at least 25% of each debt due to an enrolled creditor before a bona fide settlement offer will be made. On average, clients receive their first settlement within 4-7 months of enrollment and approximately every 3-6 months thereafter from when the prior debt was settled. Not all Clients complete the program. Estimates are based on prior results and may not match your results. We cannot guarantee that your debts will be resolved for a specific amount or percentage or within a specific timeframe. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting, legal advice or credit repair services. Our program is not available in all states; fees may vary by state. Some programs may be offered through The Law Firm of Higbee & Associates d/b/a Advantage Law. The use of debt resolution services will likely adversely affect your credit. You may be subject to collections or lawsuits by creditors or collectors. Your outstanding debt may increase from the accrual of fees and interest. Any amount of debt forgiven by your creditors may be subject to income tax. Clients may withdraw from the program at any time without penalty and receive all funds from their dedicated account, other than funds earned by the company or fees paid to third-party service providers, as may be applicable. Read and understand all program materials prior to enrolling. Certain types of debts are not eligible for enrollment. Some creditors are not eligible for enrollment because they do not negotiate with debt relief companies. To determine the offers you may be eligible for, Americor conducts a “soft credit pull.” This credit pull does not impact your credit score, creditworthiness, or ability to obtain credit from other sources. The soft pull is not a tradeline entry, it does not report against your score and will only take a few minutes.

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