Credit cards give you the convenience of paying just a small percentage of your balance each month. This minimum payment is easier to make, but can come at a higher cost. Here are a few reasons you should pay more than the minimum on your credit card.
When you make the minimum payment, you end up paying more money in finance charges. You could save hundreds, possibly even thousands, in finance charges by increasing your monthy credit card payments.
2. Pay It Off Sooner
Not only do you pay more in interest, you also end up paying over a longer period of time. It would take more than 20 years to pay off a $5,000 credit card balance (at 14% APR) when you only make minimum payments.If your credit card balance is high relative to your credit limit, it costs precious credit score points. Minimum payments only decrease your balance a little at a time. You'll typically see a credit score increase when you bring your balance down sooner with higher payments.
4. Get Ready For a Mortgage
If you plan to make a home or other large credit purchase in the near future, you'll probably need to pay off some debt to qualify for a loan. Unless your balance is already very low, minimum payments won't get you there fast enough. Raise your payments to pay off credit card balances before you make an application for a large loan.5. Make Room For More
There might be a time when you need to make a charge with your credit card. If your balance is slowly decreasing because you're only paying the minimum, you'll have to come up with another way to make the purchase.
