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Key Takeaways A new survey found that 41% of U.S. credit cardholders typically only pay the minimum amount on at least one of their credit cards each month.
Making the minimum payment on a credit card can feel like an accomplishment, but for those carrying a large balance, it may barely put a dent in what they owe.
The typical U.S. cardholder with debt carries a $7,756 balance.
The easiest way to deepen debt is carrying a balance on a credit card from month to month. Now a new survey highlights a common habit that makes it more difficult to escape debt.
According to a recent LendingTree survey of more than 1,500 cardholders, about 41% of U.S. credit cardholders revealed that they typically only pay the minimum amount on at least one of their credit cards. That percentage rises to 58% among Gen Z ages 18 to 29 and drops to 19% among Baby Boomers.
“That’s a big deal because regularly making only the minimum payment can be a recipe for staying mired in debt,” the LendingTree survey stated.
For cardholders who regularly carry a balance, knowing the credit card’s interest rate is crucial. It determines how much extra they will pay on an unpaid balance. However, 44% of cardholders told LendingTree that they don’t know the interest rate on any of their credit cards.
LendingTree stated in the report that “paying just the minimum is one of the worst habits you can get into with your credit card.”
On the one hand, paying the minimum balance fulfills the minimum requirement of a cardholder and prevents penalties. On the other hand, paying just the minimum amount could cause cardholders to stretch repayment and add thousands of dollars to their total cost.
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