The adverse effects of the minimum payment on a credit card

1. Interest generation

If you only pay the minimum payment when repaying a credit card, then when the credit card is over When the repayment due date is reached, interest will begin to accrue. Interest of 0.05 will be charged every day, and it will be charged in the form of full penalty interest. That is, interest will also be charged on the repayment part, and compound interest will be calculated on a monthly basis.

Therefore, if you keep making the minimum payment, in the long run, you will have to pay more and more interest.

2. There is a risk of overdue payments

If you keep making the minimum payment, it will lead to more and more repayments, so in the long run, it may lead to overdue payments because sometimes the payments are not made. situation occurs.

3. It is not conducive to increasing the credit limit

If you want to increase the credit card limit, in addition to swiping the card more, you also need to repay on time, and banks prefer full repayment and appropriate installments. For customers, if they keep making minimum payments, it will not be conducive to increasing their credit card limit, and there is a possibility of their credit limit being reduced.

4. Make cardholders feel dependent

Some users feel that the minimum repayment on a credit card can alleviate the current repayment pressure, so they choose the minimum repayment every time. If things go on like this, the minimum repayment amount will continue to accumulate, which will make the snowball get bigger and bigger without you realizing it.