Does Paying Only the Minimum Credit Card Amount Affect Your Credit Score?

Kokila Chokkanathan
Many credit card users wonder whether paying just the minimum amount due each month impacts their credit score. Here’s a detailed explanation of how it works and why it matters.

1. What Is the Minimum Payment?

  • The minimum payment is usually 5–10% of your outstanding balance or a fixed amount set by the card issuer.
  • Paying the minimum ensures you avoid late fees and remain in good standing, but it does not clear your full balance.
2. Impact on Credit Score

Factor

Effect

Payment Timeliness

Paying at least the minimum on time maintains a good payment history, which is 35% of your credit score. No negative impact if you pay on time.

Credit Utilization

Credit utilization is the ratio of your current balance to your credit limit. Paying only the minimum keeps a high balance, increasing utilization. High utilization can lower your credit score.

Interest Charges

Remaining balance accrues high interest, making your debt grow. Over time, this can impact your ability to repay, indirectly affecting your creditworthiness.

3. Why Paying Only Minimum Isn’t Ideal

Interest Accumulation: Only paying the minimum leaves most of the debt, which accrues high interest rates (usually 18–36% p.a.).

Slower Debt Repayment: It could take years to fully pay off the balance if you keep paying only the minimum.

Higher Credit Utilization: Carrying a large balance relative to your limit negatively impacts your credit score even if payments are on time.

4. Tips to Protect Your Credit Score

  • Pay More Than the Minimum: Ideally, pay the full statement balance to avoid interest and lower credit utilization.
  • Keep Utilization Below 30%: High utilization is a major factor in lowering your credit score.
  • Automate Payments: Set up auto-pay for at least the minimum to avoid missed payments.
  • Monitor Your Credit Report: Check for any errors or high utilization warnings regularly.
5. Bottom Line

  • Paying the minimum on time does not directly lower your credit score.
  • However, consistently carrying a high balance increases credit utilization and accrues interest, which can indirectly harm your credit score over time.
  • To maintain a strong credit score, aim to pay the full balance or as much as possible each month.
 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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