What is true about credit card repayment?

Answer 1

True about credit card repayment are the following points:

1. Minimum payment: Credit card companies typically require a minimum payment each month, which is a small percentage of the outstanding balance. This is the minimum amount you must pay to maintain your account in good standing.

2. Interest charges: If you carry a balance on your credit card from month to month, interest will be charged on the remaining balance. The interest rate varies depending on the credit card terms and your creditworthiness.

3. Paying in full: Paying off your credit card balance in full each month helps you avoid interest charges. By doing so, you can effectively use your credit card without incurring any extra costs.

4. Late payment fees: If you fail to make at least the minimum payment by the due date, you may be charged a late payment fee. This fee can vary depending on the credit card company and balance owed, but it is an additional cost on top of any interest charges.

5. Credit score impact: Consistently making on-time payments on your credit card can positively impact your credit score. Conversely, carrying high balances or missing payments can negatively impact your credit score.

6. Paying over time: If you are unable to pay off your credit card balance in full, you have the option to make payments over time. However, this will result in interest charges on the remaining balance.

7. Snowball or avalanche method: When trying to pay off multiple credit card balances, you can choose between the snowball method (paying off the smallest balances first) or the avalanche method (paying off the highest interest rate balances first).

It is important to carefully review the terms and conditions of your credit card agreement to understand the specific repayment rules and any potential fees associated with it.