A minimum payment for your credit card is the amount that the lender demands against your dues on or before the date of due settlement to avoid penalties or late fees. Expert suggests that if you are unable to pay your credit card bill due to some financial reasons, you should ideally opt for a credit card bill settlement with the help of a credit card settlement agency.
Let’s have a look at why a one-time credit card bill settlement with the help of a credit card settlement agency is a good option.
What are the Types of Amounts that You can Pay Against Your Credit Card Bill?
Basically, there are three types of amounts that a credit card owner can pay when the credit card bill is generated. These are
1. Minimum Due
The lowest amount that the lender is asking you to pay for keeping your credit card active and your credit card account in good books. However, this leads to an increased debt on you as you did not pay the complete amount that you owed, and hence it will be transferred to your next month’s due. Also, as the debt increases, the interest that is being levied from you will also increase.
2. The bill statement balance
The actual amount that you spend during the use of your credit card in the monthly billing cycle.
3. Current balance
This is the current outstanding balance that you need to pay to date. It includes your bill statement and any other charges that have been added to your bill till the current date or the date of the bill generation.
Most experts who offer credit card debt solutions suggest making full payment of the credit card statement balance every month. However, if you were unable to pay your credit card dues and settled up for the minimum amount, ensure to clear the remaining dues of the monthly bill statement as soon as possible. As the interest charged compounds on a Month on Month (MoM) basis, it may lead to a debt trap if the bill is not cleared regularly.
How much Interest Amount can a Credit Card Provider Levy?
We all know that the interest rate charged on credit cards is quite high. And given the fact that many people keep using their credit cards by paying the minimum amount of the monthly bill, it leads to an exponential rise in the due amount on credit cards.
A credit card provider levies as much as 3 per cent to 4 per cent interest on a monthly basis. If you check this interest rate with annual data, then you will note that it compounds to as much as 40 per cent to 60 per cent per year.
Such a huge interest can easily drain all your financial resources and may end you up in a debt trap.
Best Way of Getting Out of a Credit Card Debt Trap
If you get stuck in the credit card debt trap, the best way out is to seek help from a reliable credit card settlement agency to make the credit card bill settlement smooth.
Settling the debt with the help of an agency will not only save you time and effort but will also safeguard you from any legal complications. Also, such agencies negotiate with the lender on your behalf after evaluating your financial status. This leads to paying a significantly lower amount to the credit card company than what you owe.
Wrapping Up
To sum up, continuing to pay the minimum amount of the credit card bill statement may allow you to use that credit card for another month, but that is much costlier than you think. The cost of using the credit card without clearing the previous bills completely is making you pay more interest on a debt that is increasing with every purchase.
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