Can you pay principal only credit cards

We encourage you to learn about these and other debt repayment options so that you can decide on an approach that's right for you. The least aggressive debt payoff method is making only the minimum payments. Experts advise you only pay the minimums when your main goals are to keep your account from falling into delinquency and to protect your credit score from being dinged if you consistently miss payments.

Nonetheless, paying the minimum is still better than paying nothing at all, and it's easy to automate your credit card payments so that you can expect the same amount to be withdrawn from your bank account each month. When you use autopay, you can guarantee your payment is made on time, which is a huge factor in having a good credit score.

The biggest downside to paying only the minimum is that you will continue to accrue additional interest as long as you are carrying a balance month to month. The longer you carry a balance, the more interest you accrue and the bigger your debt load becomes. When you only pay the minimum each month, not all of your payment always goes toward your principal; depending on how your issuer calculates your minimum payment, a portion of it could go toward interest.

This makes it harder to completely pay off your debt. Since paying only the minimum on your credit card debt could end up costing you thousands and take you years to repay, you shouldn't follow this strategy once you can afford to pay more. Paying more than the monthly minimum helps accelerate your debt payoff and is a more active approach. When you pay more than the minimum each month, you are chipping away a larger chunk of your debt and thus shortening the amount of time it will take to pay off.

Unlike just focusing on one credit card balance, paying more than the minimum is harder to do if you are juggling multiple credit cards with revolving balances. For this scenario, we recommend the popular 'snowball' or 'avalanche' debt repayment methods. We outline each below:. When deciding what method works best, there is no right or wrong answer. Choose the method that motivates you the most: seeing results quickly by paying off low credit card balances or saving money by paying down high-interest debt.

A purchase balance, for things you bought with the card. A balance transfer balance, for debts moved to the card from other accounts. A cash advance balance, for money withdrawn from ATMs with the card. These balances may each have different interest rates. When you make a payment on an account with multiple balances, your issuer isn't going to call you and ask how you want it handled. Instead, it will distribute your payment among your balances in a way that conforms to federal law.

How to Use Debt Snowball. How to Use Debt Avalanche. Because of rules specified in the Credit Card Act , your issuer divides your credit card payment into two parts:. The issuer can apply the minimum to whichever balance it wants. Often, this means the minimum goes toward the lowest-interest balance, rather than your most expensive one. The excess payment is everything you pay above the minimum. The Card Act requires issuers to apply this part of your payment to the highest-interest balance first.

After that, the remainder generally must be applied to the other balances in descending order, based on the applicable annual percentage rate, according to the law.

How does paying off a credit card work in practice? You have a card with the following balances:. Before interest charges were added, the remaining balances would be as follows:. Most of the time, having your issuer apply your excess payment to the highest-interest balance is the most cost-effective option.

A certified counselor at a nonprofit credit counseling agency can assess your debt and help you consider which of the approaches outlined here are best for you. You may be offered the option to use a debt management plan , during which the counselor will negotiate with your creditors to reduce your interest rate, monthly payment or overall balance.

Weigh the pros and cons before moving forward. If you're feeling burdened by high interest credit card debt, start small. Make a list of your debts first to understand your current circumstances, then pick just one payoff strategy to try. You can always add on another strategy, or switch approaches, later on. The important thing is to begin the process as soon as you can. You'll limit the amount of interest you pay, and you can potentially improve your credit score by reducing your credit card balances, and therefore your credit utilization ratio.

But perhaps more important, you'll feel empowered knowing you're making an effort to live debt-free, at last. Apply for credit cards confidently with personalized offers based on your credit profile. The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach.

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