When you get your monthly credit card statement, the minimum payment often seems like an easy way out. It’s the least you’re required to repay, so why not just send that amount and move on, right?
However, only paying the smallest amount you can might not be the smartest long-term strategy for your financial wellbeing. The small monthly payments feel manageable at first, but they come with hidden costs that could leave you trapped in debt for longer than you’d like.
Understanding the credit card basics and how paying just a little bit extra can benefit you in the long run will lead to substantial savings and improved financial health.
Benefits of paying more than the minimum
- Reducing interest costs
Credit cards often come with high interest rates, which means that if you just repay the minimum amount, much of your monthly payment goes towards paying off interest. The amount you’re actually chipping away at of the original debt may be minimal, leaving the bulk of the debt to accumulate interest.
By paying more than the minimum, you reduce the principal amount more quickly, which in turn lowers the amount of interest charged in future months.
- Clearing debt faster
When you repay more than the minimum, you’re effectively speeding up the process of clearing your debt. While making the smallest payment could stretch your debt out for years, paying extra ensures that you reduce it faster.
The faster you pay off your credit card, the less interest you’ll have to pay over time, and the sooner you’ll be free of debt.
- Improving your credit score
Your credit score is largely determined by how much of your available credit you use. If you consistently carry a high balance and only make minimum payments, it signals to lenders that you may be a higher-risk borrower.
By paying more than the minimum, you reduce your credit utilisation , which can help boost your credit score over time. A higher score usually gives you access to better financial products with lower interest rates and improved terms in the future.
- Avoiding the debt trap
Many people find themselves stuck in a cycle of debt because they consistently repay the least amount they can. As the interest charges build up, it becomes harder to make a dent in the principal amount. Over time, this can feel like a never-ending cycle.
By paying more than the minimum, you break free from this trap. Your payments are actually working for you, not just keeping the balance at bay.
Building better habits
Over and above the benefits explained above, getting into the habit of paying more than the minimum helps you build better financial discipline. When you make a point of budgeting and prioritising your credit card payments, you’ll find it easier to manage other aspects of your finances too.
Many people try to manage debt using balance transfer credit cards, which offer a 0% introductory APR for a set period. However, if you don’t develop the habit of paying off balances quickly, you could easily fall back into debt once the promotional period ends.
So, focusing on building better habits, rather than relying solely on financial products, can help you better take control of your financial future. The next time you receive your credit card statement, consider paying a little more than the minimum – your future self will thank you.
@robyn.davies@capitalone.com FYI – I’ve replaced the earlier Experian link to equifax as experian link was written in 2023.
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Robyn Davies reacted with 👍 at 2025-07-29 08:55 AM
_Assigned to robyn.davies@capitalone.com_
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