What is the advantage of paying more than the minimum payment on a credit card?

Question

A) Increases credit score

B) Reduces interest costs

C) Improves future credit limit

D) Avoids penalties

Answer 1

The advantage of paying more than the minimum payment on a credit card is primarily:

B) Reduces interest costs

By paying more than the minimum, you reduce the overall balance more quickly, which in turn decreases the amount of interest you will pay over time. Additionally, making larger payments can also positively affect your credit utilization ratio and may lead to improvements in your credit score (option A), but the primary and most direct benefit is the reduction in interest costs.