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.
Paying only the minimum on credit card balances is a habit that many cardholders fall into, with 41% of them doing so, according to recent data. This behavior can have long-term consequences, as it can lead to a prolonged period of debt repayment, often spanning decades.
The issue arises because paying the minimum payment primarily covers interest charges, with little to no reduction in the principal balance. As a result, cardholders may end up paying significantly more in interest over time, making it challenging to pay off the debt. This habit can also negatively impact credit scores, particularly if other credit habits are not favorable.
To watch next: The credit card industry is expected to continue evolving, with potential changes in regulations and consumer protections. For now, consumers should be aware of the risks associated with paying only the minimum on their credit card balances and consider strategies to pay off debt more efficiently, such as increasing monthly payments or exploring balance transfer options. Additionally, monitoring credit utilization and making timely payments can help mitigate potential negative impacts on credit scores.
Originally reported by cnbc.com. LargecapNews adds analysis for finance & markets readers.