Credit cards can be a great way to manage your spending, but experts advise consumers to pay off their balance in full each month, rather than paying it off in installments. Indeed, with most cards, you will not pay any interest on your expenses.
By repaying your debt in several monthly installments, it will take you a “surprisingly long” time to pay it off: “ Because most of your refund is spent on interest rather than the amount you owe “, explains Sara Williams, founder of the site Debtcamel.
If choosing the minimum repayment amount may seem interesting, it is nevertheless a “trap”: “ You will pay less each month but the time to settle your debt will be longer and you will therefore pay additional interest “warns Sara Williams, interviewed by The Sun.
« For example, if you have a balance of £1500 on a credit card with 18.9% interest, it would take you 21 years and 9 months to settle your credit by choosing the minimum repayment (which would be around £37 ). During this period you will also pay £1991 in interest, which will ultimately double your debt “, she explains. ” If you switch to a £50 monthly repayment, you’ll pay off your balance in just 3 years and 4 months and save over £1000 in interest! ».