With household incomes under pressure due to the present problems with the world economy, it is easy to understand why some people find themselves with credit card debt which they can find difficult to repay. Difficulties can be avoided, however, if a cardholder keeps on top of their monthly credit card payments to give back the money they owe.
Full Credit Card Payments
Each month, cardholders will receive a statement detailing how much money is required to be paid back to their credit card lender from their purchases, incurred interest and any additional credit card charges. If they make a full credit card payment, i.e. they clear their entire credit balance, no supplementary interest charges will be debited, so the more careful account holders can make a payment of only the money they have spent, with no interest added. Furthermore, customers may be coaxed into making full credit card repayments on time in order to build up a strong credit rating and be offered better deals in the future.
Credit Card Minimum Payments
Holders of credit cards and store cards may use them for a variety of reasons: on purchases, to pay bills, to withdraw cash advances or to support balance transfers. While many borrowers are able to run their accounts efficiently, some can struggle to make monthly repayments. Rather than paying off their debt each month in full, the latter group tend to service their debt by aiming to make the monthly minimum credit card payments set by their lender and detailed on their regular credit card statements. Most credit card minimum payments are set very low, at around a mere 3% of the total credit balance. Though it may seem from this that banks and building societies are sympathetic to their customers’ financial plight, making only a minimum credit card payment means a person’s debt will be far from diminished. By only paying a small amount each month, interest charges for failing to make a full credit card repayment means either that the debt will only be reduced very slowly, or that it will accumulate over time and may end up as a larger amount than the amount borrowed – thus, a person’s debt may never be cleared. Any borrowers that get into financial difficulties because of this should seek advice on debt management.
Credit Card Payment Methods
Banks and other providers accept credit card payments using a number of methods to suit their customers. Cardholders can pay off their bill by cash, cheque, direct debit, telephone or via online banking. When taking credit card payments over the phone or online for the first time, lenders will usually require their customers to go through a simple security check. Cardholders can opt to make their payment by speaking to a real person or through an automated process when using a phone.
Credit Card Payment Calculators
A credit card minimum payment calculator can be a handy way of working out when a borrower will be able to pay off their balance and ultimately how much money they could be saving. All a customer is required to do is access a calculator online and enter how much they owe on a card, the interest rate charged, how much they can afford to repay each month, as well as the minimum payment amount allowed by their card provider. Such a credit card repayment calculator will show how much quicker a credit balance could be paid off by making that extra payment.
Nevertheless, a credit card payment calculator should only be used as a guide as the exact amount of time taken to clear off any debt depends on personal circumstances of the individual.