Posted by ACCU Staff ● 4/13/21 10:00 AM

Tips to Avoid the Minimum Payment Trap

The minimum payment trap with credit cards is one that can be incredibly difficult to get out of. Some might even refer to it as indentured servitude. Your best option is to avoid it altogether by never falling into it. It might be hard and will certainly require some sacrifices at first.


Those rewards come in the form of:

  • Improved credit utilization scores
  • More available credit when you need it
  • Less interest paid over the lifetime of your credit card

These tips will help you avoid falling into or remaining in the minimum payment trap with your credit cards.

Avoid Impulse Buys or Too Good to Be True Purchases

Impulse buys can hit your wallet where it hurts. And they are often for things you don’t really need and may not even really want. Avoid them like the plague.

Also, don’t fall for too good to be true sales. They are often ruses to get you into the store, where you are sure to spend more on items that haven’t been discounted. No matter how great the bargain is, you must factor in the interest rate and ask if it is really worth what it might ultimately cost if it takes you “X” number of months to repay the debt.

Unless the items are something you can pay for in cash or that have been on your “wish” list of items for quite some time and you have the willpower to resist other temptations in the store, consider waiting a little longer until the situation is right. At the very least, think about it for a full 24-hours before deciding to buy it.

Set Aside a Specific Amount of Money Each Month to Pay Toward Credit Card Debt

If you put aside a certain amount of money each month and consider it a regular expense (such as your electric bill) to put toward your credit card, you can pay that full amount. It helps you avoid making only minimum payments, which essentially only covers the interest for the month without touching the initial debt. Then, you’re always able to make a payment for your card that exceeds the interest ― and escape the minimum payment trap.

One thing you should know about credit card debt is that your goal should always be to pay your balance off as quickly as possible to minimize the amount of interest you pay and what things ultimately cost.

Eat Out Fewer Times a Month

Reducing your nights of dining out by only a couple of times each month can help you pay more on your credit card. Dinner out can easily cost $50. If you add drinks into the mix, it can escalate even faster. Multiply that $50 by two and you have $100 or more to pay toward your credit card debt.


We’re Here to Help!

Whether you’re ready to open your first credit card or would like additional financial advice on using it responsibly, we’re here for you.

Simply stop by our branch or give us a call at 800-343-6328 to see how we can help you get more mileage from your money when using credit cards.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

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