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The Line is Long, Still You'll Only Pay a Minimum Payment

I find it funny whenever I see people falling in line and then pay only a minimum payment for their credit card. I will give you an example below.

Let's say you have a 20,000 pesos balance in your card and the bank stated on your billing statement that you can pay 1,000 pesos as a minimum payment. Usually, the bank charges you a 3.5% finance charge or interest for the remaining balance you have every month. If you pay 1,000 this month, your 20,000 will be 19,000. However, when you receive your bill, your expected amount turned out to be 19,665 instead of 19,000. Imagine you paid 1,000 but later on found out that only 335 has been deducted on your balance. It's a little bit insane if you do that every single month.

Let's do another math for the second month. Again, let's say you continue pay 1k for the remaining balance you have. 19,665 will become 19,318.28 instead of 18,665. That's because of the finance charge that the bank imposed on their cardholders. If you don't know this, it will take you long before you fully paid your loan. I suggest you to pay it in full but if you say in front of me that you don't have that amount of money, then pay at least half of it or a little bit higher than 1,000 so you won't suffer from being a slave of your bank.

Also, here in my country, the Philippines, the line for paying your bills is very long. It will consume a lot of your time just waiting for your turn. And then you present to cashier a 1,000 bill to pay your 20,000 credit. If you value time, you won't act that way. Pay it in full so you won't accumulate big debts in the long run.

Also, I think this is one of the reasons why people treat credit card as bad. They jump to the conclusion that having it will only get you in trouble and more debts on your belt. But this is what I can say to them. If you know what techniques and strategies to follow, then you will change the way you look at credit card and start valuing it.

I hope you like it. Feel free to leave your thoughts below esp. if you're like the person I mentioned above, paying only a minimum payment.

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