Noah Damsky, financial analyst and director of the company Marina Wealth Advisors, explained to the media CNBC that It is a mistake to carry a balance on credit cards every month. The reason is that these have extremely high interest rates. The average is 20.75 percent annually, so it is a fairly expensive loan.
In other types of products, such as direct loans or mortgages, interest rates are usually only in the single digits, While credit card debt ends up being exorbitantly high, Therefore, a person will hardly have the ability to liquidate them and the problem will continue to grow.
In that sense, the expert's recommendation is to simply pay off credit cards every month to avoid paying interest. That is why only You must use them until you reach the limit amount that you can pay before your payment date.
If the credit card is not used intelligently, it can significantly affect the deposits.
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Is there any point in paying the minimum balance on a credit card in the United States?
If you are considering that You can continue spending on your credit card as long as you make the minimum payment, You should know that, according to specialists, this will not help anything and will only increase the problem.
Even if you make the minimum payments each month, The amount you pay will generally be used almost entirely for interest, so you will remain in debt for a long time. Damsky gave the example of a $5,000 credit card debt with a 20 percent annual interest rate. In that scenario, he would need 277 months of minimum payments to pay off the debt, by which time he would have paid US$7,723 in interest.
Even so, he clarified, Making the minimum payment is better than making none. So, if you are not able to pay off the card, then at least pay the minimum amount and look to transfer the debt to an option with a lower interest rate.
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