CHICAGO, IL – October 11, 2011 - Keeping up on
credit card debt is an important part of maintaining
a good credit score.
The Better Business Bureau serving Chicago and northern Illinois (BBB) advises
consumers to make more than the minimum payment on their monthly credit card; while
it may prevent consumers from defaulting on their account, it might also have
some unintended effects to their credit score.
“It’s important for consumers to maintain a good credit
score,” said Steve J. Bernas, president & CEO of the Better Business Bureau
serving Chicago and northern Illinois. “Once your credit score is
tarnished, it may make it difficult to finance a house or car, and plan for
your future. Simple steps can ensure you keep your credit in check.”
consumers naturally assume they should only pay the minimum payment, partly
because that's the approach taken with other monthly bills. However, this
payment strategy might not be as advisable with accounts that accrue interest -
particularly credit cards, which often come with higher interest rates.
actual act of making a minimum payment won't harm consumers' good credit score,
because credit bureaus still consider it the
"full" monthly payment in their history. However, cardholders with
large credit balances often cannot effectively eliminate their debt with the
smallest required payment, because their account will accrue interest each
month. In fact, it is possible for a credit balance to increase even as its
owner makes monthly payments.
BBB offers strategies for consumers to avoid seeing their balance inflate due
to high interest and low payments.
more each month - Consumers who pay even a small
amount more toward their credit card payment each month may be able to
prevent their balance from increasing significantly. Financially, this
might not be reasonable every month, but it's important to try to put more
toward that debt when possible.
a payment plan - Cardholders who estimate how long
it will take for them to pay off their balance and how much they need to
put towards the payment each month may be able to develop a realistic plan
tabs on ones credit situation - It may also be helpful
to check one's credit reports and scores to see if any serious credit
damage has already occurred. This can be the first step in a consumer's
approach to fixing his or her credit situation.
more consumer tips, visit www.bbb.org
As a private,
non-profit organization, the purpose of the Better Business Bureau is to
promote an ethical marketplace. BBBs help resolve buyer/seller complaints by
means of conciliation, mediation and arbitration. BBBs also review advertising
claims, online business practices and charitable organizations. BBBs develop
and issue reviews on businesses and nonprofit organizations and encourage
people to check out a company or charity before making a purchase or donation.