What is meant by credit card minimum payment?
Every credit card provider has a standard monthly fixed amount as repayment that has to be paid by the customer for the credit he has taken. Usually it’s some percentage of the balance plus interest and other charges. For example it may be 5% or credit limit or 2,500INR whichever is higher.
What happens if you miss the monthly minimum repayment of your credit card?
If you are in such a situation where you are unable to make the minimum payment then don’t just sit and watch, you should call your lender immediately and settle for some middle ground.
Failing to make the minimum repayment without intimation to your lender may result in additional charges getting incurred. The late payment will leave its traces on your credit history; consequently, it will become hard for you to avail credit in future at desirable interest rates.
When you talk to your lender about the problem, most likely you will be able to negotiate to a possible repayment break at the best or discount in minimum repayment. This will save you from additional charges and get your finances in order.
If I make only the minimum monthly repayment then how long will it take to make the complete repayment?
The first thing is that it depends on the amount you have borrowed and the APR on your credit card. Second thing, it would take years if not decades if you only make the monthly minimum repayment.
The reason is that minimum repayment is a small percentage of your credit and the amount you will repay every month will reduce as the total debt decreases.
Different credit cards have different percentage for the minimum repayment and generally it is 5%.
In simpler words, as the time will go on, you will be paying smaller amounts from previous month which will only increase the length of time required to repay the whole debt. For example it will take you 27 years to pay the debt of 30,000INR at 17.9% APR taking that 10% is the minimum payment required.
You can avoid this situation by fixing a certain monthly credit card repayment at an affordable level. If you cannot find the option to do such a thing on your statement then call the lender to set it up for you. By doing this, your repayment stays same while your debt clears off quickly.
You will also be saving huge money on interest charges as the longer it takes you to repay the debt, the more interest you pay on the debt.
What should I do to repay my credit card even faster?
Balance transfer credit card might come as the perfect savior to rescue you. Balance transfer credit cards enable the borrower to shift his credit from one credit card to the new card. You are most probably going to get a 0% interest promotional deal or a long-term to pay the debt or lower rate of interests on transferred debts. Watch out, as there is also a balance transfer fee which varies on the basis of your credit score. Deals with no balance transfer fee have shorter 0% interest periods and are apt for those who can pay the loan quickly.