Credit Card Minimum Payments
Sometimes people need an item immediately but do not have the total funds available to purchase it. The purpose of credit is to help people buy the things they need right away and pay for them over time. Consumers who budget smartly and spend wisely can use credit cards easily and effectively for large or even daily purchases.
Unfortunately, many people see credit cards as a source of “free money.” With high spending limits each month, people are tempted to spend more they can afford to pay back. Over time, these people find themselves further and further in debt and may eventually find it impossible to pay back everything they owe.
Prepared consumers understand that they should attempt to fully pay off their credit card bills each month in order to avoid paying interest and avoid owing money from month to month. Consumers who follow this rule can keep their spending under control and are living within their means. However, those who cannot pay back their debts in full at the end of the month can face financial trouble.
The minimum payment on a credit card bill is the minimum amount of money a credit card company requires consumers to pay each month toward their credit purchases. A minimum payment is actually just a small amount of what the consumer actually owes to the credit card company. The rest of the debt continues on into the next month, and the credit card companies make money by charging interest on this remaining debt.
If a person only makes their minimum payment each month, not only is he or she building debt over time because of excessive purchases, but is also incurring additional debt from interest. Over time, consumers may find themselves owing far more money to credit card companies than they actually spent in the first place.
For help consolidating your debt or for assistance with other financial difficulties, contact the Birmingham bankruptcy lawyers of GREENWAY BANKRUPTCY LAW, LLC today at (205) 324-4000.