credit cards

5 credit card mistakes to avoid making

Credit Cards » 5 credit card mistakes to avoid making

Making only the minimum payment
Making only the minimum payment © jason cox/Shutterstock.com

Making only the minimum payment

The rationale: As long as you don't have to pay more, you'd rather save those extra bucks.

The rebuttal: By paying only the minimum on your credit card bill, you're incurring much higher finance charges and increasing the real cost of whatever you purchased exponentially. Say you have a $4,000 balance on a card that requires a minimum payment of 2 percent, and your interest rate is 18 percent. It would take you 428 months (that's almost 36 years!) and $10,397.20 in interest to pay off that debt. But if you added just $20 more to that minimum and committed to making fixed payments of $100 a month, the balance would be gone in 62 months and the interest shaved down to $2,154.49. Bankrate's credit card calculator computes the payment schedule when you plug in your own real numbers.

"They need to go into a crisis budgeting mode and cut out any unnecessary expenses that they have been using credit for," Bilotta says.

advertisement

Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.42%  0.01 16.41%
Cash Back Cards 16.71%  0.02 16.69%
Low Interest Cards 11.89% --0.00 11.89%
 
Search
advertisement
advertisement
advertisement

Credit Card Blog

Mitch Strohm

Best credit card rates for Monday, May 23

Anyone in the market for a new credit card will find it's a good time to be shopping.  ... Read more


Connect with us