ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Once you have the funds available to cover your balance, pay it off in full. At the very least, you should try to pay more than the minimum, even if you can’t afford the full balance. If you’re having trouble paying your statement in full regularly, that can be a sign of a larger issue.

Detailed explanation-2: -While it may be tempting to pay credit card minimum payments to save money now, this can add time to how long it’ll take to pay off the balance. Plus you’ll pay more in interest. If you’re able, pay more than the minimum payment each month to lower your balance and keep your credit utilization rate low.

Detailed explanation-3: -It is important to note that the lesser amount of outstanding balance you pay, the more will be the interest that you will have to pay. While it is okay to pay only the minimum amount due when you don’t have enough funds to clear your credit card bills, it works fine only for the short term.

Detailed explanation-4: -This will appear as a negative credit balance in your credit card statement. Otherwise, it will be refunded to your bank account, ” adds Gupta. Says Sinha: “The additional amount you pay towards your credit card bill repayment will not increase the credit limit on your credit cards.”

Detailed explanation-5: -The more you pay, the quicker you’ll be debt-free. Using the same example, it would take 67 months to pay off the original $3, 000 balance, along with all that extra interest. That’s 5.5 years! Paying $100 per month instead would clear the debt out in approximately 38 months, which is just over three years.