All credit card users must have seen the "Minimum amount due" bit in your monthly statements. This is the minimum amount that you have to pay in order to keep a good standing with the credit card company. This is merely a percentage of the total dues for the month (generally around 5%) and can change from month to month as per your expenditures. If you fell that you can get away with paying just the minimum amounts and not face any penalties you are grossly mistaken! You have fallen for the "minimum dues" trap. How Credit Card Interest Works To know the dangers of paying only the minimum dues, you need to know how interest is charged by credit card companies. There are 3 aspects that you need to remember: 1. Interest Rate If you study your Card, the monthly interest charged is 3-4%. That may not seem much, but annualized, this interest balloons to 36-48%. Yes you saw that right! 2. Compounding of Interest This interest generally compounds daily for most credit ca...
Personal financial guide