Anonymous
Anonymous asked in Business & FinanceCredit · 3 weeks ago

Finance charges?

Help me understand. I have my first credit card and I have auto pay set up to pay the minimum amount due on the due date. I’m not paying any late fees so I know there’s no problem with that method of paying. However in then getting hit with a finance charge monthly that’s damn near close to the minimum due so I’m not making any headway in paying this off. What am I doing wrong? 

10 Answers

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  • Anonymous
    3 weeks ago

    Because you are paying the minimum.  That might be only 2% of the balance.  Depending on your interest rate and any new charges, it's easy to have the balance continuing to grow.

  • 3 weeks ago

    What you are doing wrong is paying only the minimum due. This is what happens when you pay only the minimum due.

    If you don't want this to happen, then you should pay more than the minimum due. Ideally, pay the entire new balance.

  • Anonymous
    3 weeks ago

    You should always pay the entire balance in full every month. If you don't know that you are not mature enough for a card.

    NEVER charge anything you cannot afford to pay in full on the due date.

    That's what you are doing wrong.

  • Eva
    Lv 7
    3 weeks ago

    You are paying just the minimum payment. You'll never get ahead that way. Look at your statement. It tells you how long it will take you to pay off the balance if you only make the minimum payment. Double or triple that amount in order to get it paid off.

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  • 3 weeks ago

    If you want to avoid paying finance charges, you need to pay your entire statement balance in full, each and every month.  Whatever portion of your statement balance you don't pay becomes a carried balance, and your credit card charges you interest on your carried balance.  Ridiculously high interest.  

    This is all explained to you in the cardmember agreement that you didn't bother to read.  

  • 3 weeks ago

    the rest of them people answered perfectly to your question, I just wonder how did u think credit card system worked? u somehow thought someone will give u money to use and then not profit from it in any way? the best card to pay the credit card off is  NOT TO GET  a credit card in the first place. pay it off and close the account

  • 3 weeks ago

    (A) paying only the minimum

    (B) paying just before the due date.

    Even if you paid only the minimum,  paying it promptly after the monthly statement  will reduce the finance charge considerably. 

  • DON W
    Lv 7
    3 weeks ago

    The problem is you  are only paying the minimum amount, which means you get hit with heavy interest.  Your goal should be to pay off the entire amount.  If you can't do that, try to pay half of the entire amount.  Never pay only the minimum.

  • 3 weeks ago

    If you do not pay-off your card in full every month, interest gets charged the amount you spent from the moment you spent it to the moment you repay it (plus interest) in full. Interest rates on credit cards tends to be high. The following month, you will continue to be charged interest PLUS interest on the interest already added. Paying the minimum each month is an easy way to get yourself in financial trouble and it will damage your credit rating. Even you pay in full when you get your next statement, you will still owe them money because interest continues to build up until they actually get your payment. This is not the way to use a credit card. You should aim to pay off your card in full every month or, even in an emergency, only spend what you know you can afford to repay (plus interest) over a couple of months.

  • 3 weeks ago

    Credit cards are like cigarettes. Whenever you run out, you'll always need more. My best advice is to never start credit cards in the first place. Begin your day with a nice coffee or walk in the woods.

    • Never
      Lv 7
      3 weeks agoReport

      Credit cards are not the problem. Spending money you dont or wont have is the problem.  Cards are more secure than cash.

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