When one uses a credit card, he has to pay a monthly minimum amount if he is not able to pay the entire bill at one time. The smallest part is up to 3% of the total amount or $10 whichever is higher. Many consumers prefer to pay the minimum sum due. But they forget that the annual interest is charged if the entire amount is not paid within the specific time period that normally is about 45 days. By paying the smallest fee the consumer might take years before they can make the total repayment.
Pay more than the Minimum amount due.
By paying more than the minimum sum due can help the debt amount to reduce faster. The interest for the next month will be charge on a lesser amount. Every little extra amount counts in making the payments. Paying twice the minimum amount due also reduces the interest charges every month. Paying just the initial sum due will not reduce the entire debt dimension. You will notice in the next monthly statement that the total debt amount remains unchanged. This is due to the 20% interest charged on the balance amount.
Eliminate the entire debt.
Instead of making payment more than the minimum amount due, it is a very wise decision to make a complete payment of the total amount if possible. You might be having some savings in the bank. There might be some investment in the stock or real estate. Consider these to pay off the entire debt. There are debt settlement companies that help to settle the entire amount by reducing 30 to 50% by negotiating with the creditors. Once the entire debt is cleared, the monthly interest will be your profit as you will no longer be required to pay that.
Making a payment of entire amount is compulsory if the consumer wants to avoid any kind of interest. Do not fall for any of the guaranteed returns scheme. If you cannot pay the entire amount within the specific time, pay at least more than the minimum amount that is due every month. Also if possible make payments more than once a month in order to achieve a faster debt relief.