This happens if you only pay the minimum on your credit card, loan, or debt

This happens if you only pay the minimum on your credit card, loan, or debt

Many users of credit card generally use this payment method throughout the month and only make I pay minimum which shows your account statement after the appearanceor they only cover a fraction of what they spent in the period at the time of the payment deadlinewith whom the monthly payment is not enough to settle the debt generated, with whom little by little debt problems that will eventually affect your credit history at the credit bureau, which may complicate your access to finance in the future.

This complicates matters in the already dreaded January slope, but due to the decisions of Politics monetary who set up the Bank of Mexico Throughout this year, the outlook is even more challenging for cardholders due to the increased interest ratewith which the credits and ready are more expensive and debts slopes in your plastic can spiral out of control if you don’t plan your personal finances through a monthly budget.

As the interbank benchmark rate is higher due to the increase in Banxico, the cost of financing by bank or departmental cards increases and the unpaid balance leads to higher monthly payments that the user must cover regardless of the amount of the outstanding balance. This is why it is advisable for you to liquidate each month what you have spent and thus not to leave debts, which are said to be total.

The central bank interest rate was adjusted upwards throughout 2022 by 500 basis points, which had not happened since 2008 and currently stands at 10.50%, which has a impact on the cost of money and credit provided by credit institutions and other businesses.

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Banxico’s current monetary policy trend has not yet stopped and the benchmark rate may continue at its current course following the US Federal Reserve (Fed) interest rate moves.

Said institution would continue to rise after the New Year 2023 with a rise of 50 basis points during the month of January and another 25 bp in March, with which the terminal rate would position itself at 5.25% after this date.

But the Mexican central bank will be able to follow in the footsteps of the Fed and by next March it would have a rate of 11.25. After remaining stable at this level for a few months, the decline could begin in the second half of 2023 so that at the end of that year, the interest rate of the Mexican economy would remain at 10.50%.

With this level of interest, it is best that you take care not to leave any debts unpaid because you will soon see unpayable debt that will rob you of sleep. The best thing is that you don’t borrow more than 30% of your income level, so you need to make sure you prioritize having your needs covered and spending responsibly with your bank card.

We suggest you read Making Money Work Helps Your Personal Finances

Check if your credit card has a flexible interest rate, in which case Banxico increases will impact the size of the debt as you will pay more and more for your financing.

For more information on this and other topics, visit our My Pocket Credits section.

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Graduated from the Faculty of International Studies and Public Policy of the Autonomous University of Sinaloa. Observer of the sky and nature; lover of music and literature.

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