When your monthly statement and bill come in the mail, especially if you’re facing tough times financially or have a large amount of credit card debt, it’s easy to just mail off the minimum monthly payment. That amount will seem less daunting eventually, right? Not necessarily. It’s true that making the minimum payment every month will keep your account in good standing, however it isn’t moving you any closer to financial freedom. There are several factors to consider when deciding what to pay on your credit card bill. Here are a few.

Consider the Interest

It’s easy to forget that interest racks up on your account monthly. This interest is the main reason credit card companies don’t mind accepting such a small payment from you every month. The interest that they charge is actually a great source of income for them. Not to mention the longer it takes you to pay off your card, the more money they make off of you in interest. Most people with high amounts of debt also have high interest rates. This means that by only making the minimum payment you’re barely making a dent in the principle balance on the card, and that’s assuming you aren’t using the card anymore. If you’re still using the card regularly then it’ll be even harder for you to get that balance to drop.

It Can Hurt Your Credit Score

People often assume that since they are making all of their monthly minimum payments on time that their credit score can only be impacted in a positive way, however that isn’t true at all. Thirty percent of your credit score is determined by your credit utilization ratio, or the total amount of credit you have access to divided by the amount you actually use. This number shows potential lenders how risky of a borrower you could turn out to be, the higher the percentage is the worse you will look.

It Can Impact Your Motivation

Achieving the ultimate goal of debt freedom is largely a battle of will and a determination to stay motivated. Sending in your monthly minimum payments every month, on time, and getting the next statement with a balance that has barely budged makes it easy to give up hope and decide that no matter what you do you aren’t going to achieve that debt free goal. Being able to open a bill and notice that the balance has dropped by a decent amount and realizing that freedom from your debt isn’t a decade away can give you the motivation you need in order to keep up on those payments.

The next time that statement comes in the mail take the time to really look it over and figure out what you can afford to spend above and beyond the monthly minimum payment. Although it may seem hard initially to let go of the extra money, you’ll definitely thank yourself when the next billing cycle hits and you can actually see the change.

If you find yourself struggling with debt or would like to find out about becoming debt free, call Debthelper.com at 800-920-2262, or schedule a free counseling session today.