Paying credit card balances in full each month allows you to avoid paying any interest at all for up to nine months. This is an advantage that’s pretty easy to overlook, since other credit card companies pay interest on your balance in full even after the minimum payment period ends. But this is also the advantage that will ultimately enable you to pay off your credit card in full each month.
How Does It Work?
According to companies like SoFi, a major benefit of paying your credit card balances each month is that it cuts down on the interest on your balance. Credit card interest rates are determined by the balance you owe on the credit card, how many days you have the account open, and how much the credit limit is.
For example, if you have a $3,000 credit card balance that has a $1,000 balance limit, then your interest rate is 13.34%. That’s right 13.34% percent interest on your $3,000 credit card balance for the first nine months. That’s just for the minimum payment on the card. At the end of the nine months, if you still have the same $3,000 credit card balance, you’re paying a lot more interest because you owe $3,000 rather than $1,000. So for many people, paying off their credit card balances each month actually costs them a lot of money.
So if you want to avoid paying interest on your credit card balance each month, paying it each month is the best option. But paying off a credit card balance each month is not easy. Here’s how to do it:
How to Pay Off Your Credit Card Monthly
Step 1: Pay Off the Minimum Balance First. The first step to managing your credit card balance is to pay off the minimum balance first. Here are the minimum payments you should make on your credit card each month. (If you want to make all your minimum payments, keep scrolling.)