A credit card is a convenient tool that allows you to use bank funds without paying interest and receive bonuses for purchases. But it is important to use the credit card correctly so that there is no excessive financial burden. In this article, we will tell you how best to make payments on a credit card.
What is a mandatory payment?
When you first start using a credit card, you don't pay interest because there's a grace period (on average, it lasts 55 days). If you return the money to the card before the grace period ends, you can use it again without interest. But the grace period doesn't relieve you of the mandatory monthly payments.
When a debt arises, the bank calculates the amount of the ukraine mobile database minimum, or mandatory, payment that must be repaid. On average, it is from 3 to 10% of the debt. It includes part of the debt and interest (if the grace period has ended). The payment is transferred to the card, and these funds can be used again (except for the interest written off).
If you miss a mandatory payment while the grace period is in effect, the bank will start charging interest from the first day the debt is incurred, and possibly penalties. This will also negatively affect your credit history.
How to redeem a card
Since interest rates on credit cards are higher than on consumer loans, it is better to close the limit before the end of the grace period. If a debt does arise outside the grace period, it should be repaid as soon as possible. This can be done in a single payment or gradually.
Full debt closure with a single payment
If you have the amount needed to close the limit, it is worth depositing it into the card account. These funds will actually remain with you, but you will not pay interest to the bank.
Once you have fully repaid the limit, the grace period will start again. Even if interest has already started to accumulate, overpayments will still be reduced to a minimum.
Making minimum payments
This is the most expensive and time-consuming way to pay off a credit card. In this situation, you go beyond the grace period and pay large amounts in interest.
It is worth closing the limit with minimum payments only when you can stop using the credit card at least for a while. Then the amount of debt will gradually decrease. But in a situation where you make a payment and spend the funds received during the month, it is better to use another method - for example, refinancing.