Often when we get paid or come across a large sum of money, our first instinct is to pay off the credit card bill.
While this isn’t necessarily a bad idea, it can lead to problems down the road if you make a large payment, and leave little for the next payment, or for other monthly liabilities.
If you have multiple credit cards and other loans then you will also have multiple mandatory payments that must be made each month. By paying a large amount on just one credit card, you may leave little to pay the minimum payment on the remaining credit cards and loans.
Be careful to budget accordingly to ensure you have enough money to pay the minimum on all your accounts each month. It’s more important to meet your minimum payments than make a large payment on one account. And a missed payment is a lot worse than a finance charge, and could lead to a bad credit score fast.
Sure you may have a balance you can tackle with one big payment, and the desire to pay off one credit card completely is always tempting. But plan ahead before you chase psychological victories.
Try my credit card payment calculator to manage your monthly bills. It will help you keep track of your outstanding debt and your minimum monthly payments and due dates.