The Benefits of Paying More Than the Minimum on Your Credit Card Bill

A minimum payment is always included on your monthly credit card statement. Minimum payments are typically fixed amounts. Additionally, if your balance is above a certain limit, you will be charged a percentage of your balance, usually between 2% and 4%. Keeping your account in good standing always requires you to pay the minimum by the deadline.


However, paying just the minimum every month isn’t a great financial strategy. Your credit scores will improve, and your debt will be reduced faster if you pay more than the minimum payment. Below are some tips.



Keeping a balance on your card month after month could indicate that you’re spending more than your budget can handle. At least you can stay current by paying the minimum every month, but this is an expensive way to use a credit card.


Your balance will accrue interest if you carry a balance from month to month. Your purchases can end up costing much more than they are worth in the first place. In turn, your minimum payments will increase as a result.

When you pay more than the minimum payment, you shrink the size of your balance and reduce the amount of interest you are charged. You should always pay off your credit card balance in full every month to avoid paying interest.



By paying more than your minimum payment, you can reduce your credit utilization, or how much of your available credit you are currently using. This is part of the “Amounts Owed” factor on your credit report, which makes up 30% of your FICO® Score. A high credit utilization ratio can be damaging to your credit score after a certain limit because it indicates a difficult time managing your credit.


You can lower your utilization by paying more than the minimum. What you pay depends on how much you’re paying and your current balance. Maintaining a balance from month to month and paying the minimum may eventually cause your balance to increase to a point where it adversely impacts your credit if it hasn’t already.



If you only make the minimum payment, it can be difficult or impossible to pay off your credit card balance – or even to pay it off entirely. It can be difficult to make progress with your minimum payment when interest hits your account, especially if your balance is high. When you can’t pay your balance in full, paying above the minimum and watching your credit card spending can help you pay off your debt much faster.


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