The so-called minimum payment of the credit card is a very common practice among Chileans, considering also the level of indebtedness of our countrythat grew up in pandemic at historic levels.
Nevertheless, making only the minimum credit card payment is the least recommended action by expertsthen bring impactoften unknown to users, ranging from the increase in debt, to the point of strongly affecting our credit evaluation.
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“Use your Credit cards, exchange your miles, points, dollars for what is most useful to you at the moment, gain liquidity and flexibilitybut do it in a conscious and informed way.
Remember, the credit card is a financial product which offers the possibility of buying with borrowed moneywhich we have to return between the end of the billing period (cut-off period) of the credit card and the payment deadline for that period, so as not to pay interest”, explains Nicolás Chacón, CEO of Neat Paymentsplatform that helps to order your payments.
The expert points out that it is very important to consider that that money must be returned in full, otherwise constant debts will be acquired with the bank.
Nicolas Chacón explains that the credit card it’s a loanis a credit that has two major components: 1) Capital two) Interest.
The quota delivered when opening this product is the capitalwhat they charge for not paying on time, the interest.
The person pays the total of the capital or quota used during a billing period, interest is not paid.
When paying only the minimum of the credit card The total of the capital or quota used in the period is not being paid, but only a minimum part.
“It is very damaging, because we never got out of debt and worse still this becomes paying only interestis a very bad practice and we finally become a bad payerand so the most important point when evaluating our credit situation we are harming it.
It’s better to tighten your belt pay as much as possible before making a minimum payment.
The unknown risk is that you don’t really get out of debt and this has collateral damage on our monthly budgetat some point we will have to pay and limit spending on other things, or perhaps even have to take on another debt to leave this balance paid, «he adds.
A big problem that snowballs and the user you will always continue to pay more interest than principaland the debt will continue to increase.
“For this reason, it is best to spend what we are sure we can return on time. In the case of using installments, verify that they are without interest and be aware of the risk that late payments imply.
WHAT HAPPENS IF I PAY LESS THAN THE MINIMUM?
The bank will charge you even more interest and may also be reported to the delinquent registry.
Then you are classified as debtor with bad payment behavior and you can finally choose worse conditions in loans and other products.
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