Debt: Why You Need to Pay More Than the Monthly Minimum

Written By Jeff Hindenach
Last updated February 2, 2020

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September 29, 2015

Simple. Thrifty. Living.

You’ve likely heard that many Americans have credit card debt, and if you are reading this article, you are probably one of them. You may not have a large debt, but if you fall into the monthly minimum payment trap, that few thousand dollars can turn into tens of thousands over time.

Credit card companies don’t want you to pay off your debt. They are happy with you paying a monthly minimum, because a significant portion of that minimum payment is interest. That means that while you may think you’ll have your debt whittled down in no time, you’ll actually end up paying thousands of dollars in interest over a few years.The average household credit card debt is approximately $15,000. That accounts for more than $850 billion of credit card debt across the nation. Depending on your minimum payment and your interest rate, a debt of $15,000 could take about 20 years to pay off if you only pay the minimum.

So how can you pay more than the minimum on a consistent basis and still handle the rest of your finances? Follow these rules to manage your debt without forfeiting your extra cash and keeping a healthy credit score.

This is the most important thing you can do. If you apply even just a little extra each month toward your payments, it will have a larger impact on reducing your debt. Try to add at least $25 more than the minimum. This will affect more of your actual debt rather than the interest. An additional benefit is that this action might actually improve your credit score as well

You might not realize that you can sometimes get a lower interest rate on your cards simply by asking. You might not always be successful, but try asking again in six months. One of the keys to lower your interest rate is raising your credit score. This may seem hard when you are dealing with debt, but there are simple ways to raise your credit score. Credit repair companies can also help you remove negative items from your credit report, which can help raise your credit score. Check out our credit repair reviews to find one that can work for you.

If you can’t get a lower rate on a high-interest rate card, consider transferring the balance to a low- or 0 percent-interest rate card. This way, when you pay your debt each month, you be more effective in reducing debt faster. If you don’t qualify for a new credit card, look into debt consolidation services to help you with your debt. Here are our reviews of Accredited Debt Relief compared to other debt relief products like National Debt Relief.

If you are finding it hard to make more than the minimum payment each month, consider taking a look at how you budget your expenses. It’s easier to find areas to cut back on extraneous spending when you see it written down.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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