ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What happens when you only make the minimum payment. While it’s important to make at least the minimum payment, it’s not ideal to carry a balance from month to month, because you’ll rack up interest charges (unless you’re benefiting from an intro 0% APR) and risk falling into debt.

Detailed explanation-2: -Usually used as a derogatory term, a deadbeat in the credit card world is someone who pays off their balance in full every month. Deadbeats often reap the rewards from credit card programs without having to pay high fees or interest due to regular and full payments on their cards.

Detailed explanation-3: -Myth: Carrying a balance on my credit cards will improve my credit score. Fact: Paying off your credit cards in full every month is the best way to improve a credit score or maintain a good one.

Detailed explanation-4: -A minimum payment is exactly what it sounds like: It’s the bare minimum you’re contractually obligated to pay each billing cycle. If you don’t pay at least the minimum by the due date, you could be hit with a late fee and penalty APR, or annual percentage rate.