7 Ways to Avoid Minimum Charges on Your Credit Card
Credit cards have become what many of us would call the “necessary evil” that gives us some amount of freedom and financial control in our lives. While credit cards enables us to monitor and better manage our financial affairs, it can also cause us to spiral into unwanted debts. Credit cards allow you to access funds that you can then payoff on a percentage basis each month.
The credit card company will set a minimum monthly payment rate that “is meant” to help you stay on top of your payments, and stay debt free. This minimum charge can actually cause you to amass a huge debt and cost you more in the long run. Here are seven ways you can avoid those minimum charges and the huge fees they attract.
1. Pay Your Credit Card Balance in Full
Credit cards carry a variable interest rate that can both work for, and against you. The federal government sets a prime rate that credit card companies use as an index for setting the interest rates they charge. If the index rate goes down, the consumer would benefit, but the catch is that some credit card companies set a minimum rate that ensures no matter how low the federal government lowers the primary rate, card holders would not pay below a certain rate.
Interest rates are not steady, and therefore payment amounts can vary each month. Paying the minimum monthly rate on a balance as oppose to paying it in full will see you paying more in finance charges.