Credit Card FAQ
Do I Have to Pay off my Credit Card Debt in Full Every Month?
Applying and owning a credit card is the easy part of the whole application process. The problem with new credit cards started to rise when you were required to keep up with payments. Due to a lack of knowledge in terms of how credit cards work, many people tend to find themselves in a lot of debt. The common perception that many people have adopted in regards to credit cards is that you can buy things on credit and pay them back later. It is as simple as that; when in actual fact that is not the case. Even though repayments of credit card are made out to be so simple, in reality the image is not as black and white as some people make it.
The first thing that you have to realize is that every credit card that you might own is bound to have some form of a credit limit. What that basically means is that every month, you have a set limit which you can not exceed. In most cases the amount is between $1500 to $2500 depending on your credit history. Say for example that during this one month period, you ended up spending $2000 on your credit card limit where in actual fact your limit is $2500. The common question that tends to come up quite a lot is how much are you expected to pay back at the end of the month.
Even though you have used quite a lot of the monthly limit, the surprising thing is that you won't be expected nor are you required to pay the full amount that you have used in that one month period. There is a minimum requirement however that you are required to meet. This minimum payment requirement is set as an agreement when initially applying for the credit card in the first place. Even though this may seem like a bonus that you are not expected to pay back the entire amount used in one month, there is a lot more than what meets the eye in these situations.
What people tend to forget is that when ever you buy something on credit through a credit card, you will be expected to make the repayment with interest. Even though you might decide to keep to the agreed minimum payments that were decided when you initially registered for the card, what that means for your outstanding dues is that they will just increase in amount due to a monthly reoccurring interest rate that is calculated on the outstanding balance. The longer you leave the outstanding dues for on your credit card, the more you will end up having to pay for it in the long run.
Even though you are at liberty to choose how much debt you want to pay off, in order to avoid any chance of you finding yourself in the situation where you are finding it difficult to keep up with your monthly debts, it is recommended that you make your payments as soon as you can.
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