This is ‘one of the worst’ credit card habits, experts say—41% of cardholders do it
Missing a credit card payment can damage your credit for years, while paying only the minimum can leave you in debt for decades.
TL;DR
- Over 4 in 10 U.S. cardholders regularly pay only the minimum on at least one credit card, a habit experts call detrimental.
- Paying only the minimum often results in most of the payment going towards interest, prolonging debt repayment for years and significantly increasing the total cost.
- At an average balance of $7,756 and APR of 20.94%, minimum payments could lead to nearly 27 years of repayment and $13,000 in interest.
- Paying down the balance more frequently throughout the month can reduce interest costs as credit card interest is typically calculated daily.
- The ideal strategy is to pay off the credit card balance in full each month, using the card as a payment tool rather than a source of borrowed funds.
- Consistently being unable to pay the balance in full is a sign to review spending habits, create a budget, or temporarily stop using credit cards.
- Missing a payment, even by 30 days, can negatively impact credit scores significantly and stay on a credit report for up to seven years.
- To avoid missed payments, experts recommend setting up automatic payments (autopay).