The less you pay toward your debt balances every month, the longer it’ll take to pay off your debts. Interest can exponentially expand the timeline for your debt repayment. Any remaining debt balance racks up interest charges every month.
Take credit card debt, for example. In February 2020, the average credit card interest rate was roughly 15%.2 That means that any credit card debt you have gets 15% worse every month. By increasing your monthly payments, you reduce the balance that’s subject to that 15% interest.
It’s only ok to pay the minimum on some of your credit cards when you have a debt-repayment strategy that requires you to make a big payment on one of your credit cards. The key is to be making significant dents in at least one of your outstanding balances every month.