How Much Of My Card’s Balance Should I Pay Off Every Month?

When dealing with the issue of credit card repayments, it is not always possible to apply the most common-sense solution. Ideally, we would never purchase any item whose debt we could not immediately and fully clear when the statement arrived. In a perfect world, the only reason we would carry a credit card would be so that we do not run the risk of keeping a large amount of cash on our person.

The perfect approach to credit card repayments:

The perfect approach to credit card payments is for you to pay the whole debt each month, every month. Then there will be no debt accumulating over time, and you will never have to pay more than the purchase amount in the form of the extra interest on the unpaid part of the debt.

Unfortunately, life does not run so smoothly for most of us, and there will be times that you simply cannot afford to cover the entire cost of the credit card repayment. If that is the case, you need to consider certain factors. The most important is that you adhere to the minimum repayment demand. Remember that this is a demand, not a request. This is the amount that you must pay. If you fail to pay this amount – which is a small percentage of the overall debt – you will be considered in default on the loan, and this could have consequences for your credit rating, and ultimately result in legal action on the part of the credit card provider.

Could it be an option to delay a credit card repayment?

Providing you still obey the minimum repayment demand, then there are circumstances when paying off a large chunk of your debt could actually leave you worse off. To put this in the simplest terms, if you have a certain amount of savings in the bank that is earning interest at 5%, it would not be in your favour financially to take some of that to pay off a debt attracting only 2% interest. If you did so, you would end up being the net loser. And if you take advantage of a balance transfer of your debt to another credit card, then it is certainly possible to find a rate of that kind, and sometimes even a zero rate for several months.

At the moment, however, with interest on savings being so low, that scenario is not so relevant. Equally, when faced with a credit card repayment, it is the responsibility of the customer to do their sums according to their own specific circumstances, to ascertain exactly which route is best for them. The above example is a simplification, and there may well be other factors that impact the customer’s calculations.

>> Calculate your credit card repayments

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