Caught myself paying the minimum on my cards for 3 years straight

I thought as long as I paid something every month I was doing fine. Then a loan officer laughed when I asked about a car loan and showed me my credit utilization was maxed out across the board. Anyone else have that moment where you realize you've been doing credit totally backwards?

3 comments

3 Comments

amy_anderson4d ago

Did you ever think you could just pay off the full statement balance every month and not get charged interest at all? It hit me hard when I found out that minimum payments just keep the debt alive forever while the bank collects interest. I started treating my card like a debit card after that and only spent what I could clear each month. It took a while but my utilization finally dropped below 30%.

dakotab933d ago

Honestly though is it really that deep? I get that minimum payments aren't great but if you just pay a bit more than the minimum each month you're probably fine.

wadew513d agoTop Commenter

Huh, but doesn't treating a card like a debit card kinda miss the point of having a credit card in the first place? I mean, I get not carrying a balance, but I use my card for the rewards and the fraud protection. @dakotab93, you're sorta right that even just paying a little extra helps, but I think the bigger issue is people not realizing how fast interest adds up. I pay my statement balance every month too, but I still keep a small emergency fund in savings just in case something comes up and I can't clear it.