Reducing your debt should be a priority to you, so why do so many people insist on paying the minimum payment on their? So to give those of us an insight into the workings of just meeting our minimum re-payments each month, will hopefully help change your ways for good.

The downward spiral to more debt...

At the end of each month when you receive your statement you will look at it and say to yourself that your credit card company is only seeking an amount of say £40, this is only 2% of the total that is owed which is £2000, by paying the minimum amount you will feel that you are being good and paying of your debt, well you are, though it will take you many years to pay off a £2000 debt this way, only if you stop spending what you are paying back each month, if not this is a debt that you will always have.

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Banks and credit card companies have steadily dropped the percentage of the minimum re-payments from an original 10%, this is because people then were paying their debt back quicker when it was 10%, so away of making more profit in interest, was to drop the minimum payments asked for, this will then lead to more interest being paid on top of the original interest and so on, a very sly move.

What to do...

If you find yourself in this situation the best thing to do is to stop using the credit card at once, try and work out what you can afford to pay into the account each month and stick with it, don’t think for one minute that because the debt is going down and the credit card company are now asking for lower minimum payments than they were to start with, means that you will drop the payments you are making, this will lead to you paying even more interest and taking longer to pay off the debt, than you would have had you stuck with your original amount. Paying it off quicker will save you a wad of cash in the long run and will help you get back on an even keel financially.

The only time that paying the minimum payment to a credit card, that is advisable is if you have any larger debt that has a higher rate of interest, by putting as much as you can afford into this debt will save you cash, that can be saved for paying off your next highest debt and the next, till you are hopefully debt free.

Think again...

So remember minimum payments are a dangerous game and will only succeed in putting you further in debt and costing you more of your hard earned cash for no product at all.