If you have a credit card, you should, theoretically, know how missing a payment or paying off less than your total balance each month can lead to a debt spiral. The interest rate on credit cards is very high compared to other financial products, and it compounds when you don’t pay your balance off in full each month.
And credit cards make it easy to fall into that debt spiral. One way they do this is that your issuer will display the “minimum balance due” each month prominently on your bill/online account, and if you don’t know better and continually pay off just the minimum, you can end up owing a lot more money over the long term.
When credit card companies give you more flexibility by paying the minimum balance, it is really a way for them to profit from you. It’s easy to spend more than you can afford, but you should only charge as much as you can pay off in a single month. Credit cards companies are counting on the fact that you won’t.
Rev. Dr. Donna Taylor is the Pastor of Andrew Chapel United Methodist Church (UMC) in Montross, VA. Rev. Dr. Taylor promotes best practices by teaching financial literacy workshops and currently serves as Finance Chair in the Rappahannock River District for the UMC. In May 2015, Rev. Dr. Taylor received her Doctor of Ministry from Virginia University of Lynchburg in Lynchburg, Virginia. Rev. Dr. Taylor was born and raised in New York City and recently discovered her ancestral roots in Guinea-Bissau, West Africa. Rev. Dr. Donna Taylor is married to David Taylor and they have a son and a daughter. Their daughter is a educator and son is an Active-Duty Senior Seaman in the Navy married with three children. In her leisure time, she enjoys traveling, reading, swimming, writing poetry, crocheting and spending time with her family.