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The result of making minimum payments

If your credit card debt looks a bit overwhelming, you might be happy when you log on and see the minimum payment requirements. They're far lower than the total you owe. However, while making at least these payments is wise, you should know what will happen if that's all that you pay.

For one thing, your credit score could start to drop. When you pay off the card, it can build your score, but keeping a balance on it and just paying the minimum for months can hurt you.

Additionally, many credit cards are set up so that there isn't a fixed minimum payment. Instead, it's a percentage of the total that you owe. If you only pay the minimum -- say it's just $40 -- then you are going to pay interest on the rest of the money on the card. This interest will be applied to the total. Even if you don't buy anything, the next minimum payment would be higher than $40. If you do buy things, it goes up even more.

Finally, you may get additional fees if you go over the limit. For example, if the limit on the card is $5,000 and you leave $4,000 on it, you could pay an interest rate of 15 percent. That's $600 on top of the $4,000. In two months, your card will not only be maxed out, but it'll be over the $5,000 limit, and more fees can be piled on top, increasing the bill yet again.

If you made mistakes with a credit card, such as only paying the minimums and racking up debt without realizing it, there many options in Pennsylvania. These include debt consolidation and bankruptcy.

Source: Nerd Wallet, "What Happens If I Only Make The Minimum Payment On My Credit Card?," Anisha Sekar, accessed June 24, 2016

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