Some people only pay the minimum with their credit card: If you are one of them, then we will tell you why it is not recommended to do so.
According to the Federal Consumer Attorney (Prophecy) you will end up paying more interest and you will lengthen the time of your debt, for a long time.
”If you have a credit card and each month you deposit only the minimum, be careful! You will end up paying more interest and extend your debt for a long time. The best thing for your pocket is to make the payment so as not to generate interest or, where appropriate, deposit more than the requested amount,” the agency said.
The minimum payment is a percentage of a debt to be settled on the credit card. It is done monthly and depends on the bank and the expense made.
If you do not make at least the minimum payment, credit card can be canceledIn addition, default interest is generated and credit status may be affected.
However, Profeco clarified that making only the minimum payment on a credit card can create more financial problems long-term.
How does making just the minimum payment on a credit card affect me?
Depending on each bank, the minimum payment on a credit card is between 2% and 5% of the full balance. As we mentioned, the prophecy He explained that this generates higher interest and more debt.
That is, cardholders they will have to cover the rest of the debt with interest, in addition to considering other amounts to be settled at the bank. To the user’s debts must be added the opening fees, the credit card annuity, among other commissions.
Simply put, if you only make the minimum payment, your debt will grow and spread.
What are the Profeco’s recommendations?
Profeco issued a series of recommendations to settle the payment of a credit card and thus avoiding a higher payment of bank interest.
Basically, prophecy recommends paying the debt so as not to generate interest or, failing that, paying more money than requested for the minimum payment.
But there are more recommendations, they are the following:
- Make the minimum payment only in an emergency. This will avoid default interest and will not affect credit history.
- If the debt is very high and you can only make the minimum payment, it is advisable to refinance the debt with a lower interest rate.
- It is recommended to know beforehand the time it will take to settle the debt with the minimum payment and the annual interest rate of the card.
- Resorting to the minimum payment can put your finances at risk and, in an emergency, you could not use the credit card
How to calculate the minimum payment on your credit card debt?
The National Commission for the Protection and Defense of Users of Financial Services (Condusef) has a tool that can be very useful for cardholders, since it allows you to see the details of your credit card debt.
Minimum Payment Calculator It provides guidance to know the amount of the minimum payment, the outstanding balance to be settled and the time to settle the debt if you only pay the minimum amount.
In this link you can make use of the Condusef tool.
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