Warning to credit card users making minimum payments

For consumers trying to clear their credit card debt by paying only the minimum amount, the debt burden can become increasingly heavy. According to experts, credit limits that are not aligned with income levels, the uncontrolled increase in installment spending, and attempts to pay off debt with new loans can drag users into a permanent payment cycle.

Hüseyin Ölmez, President of the Banking Commission of the Consumer Confederations (TÜKONFED), stated that one of the most significant risks in credit card usage is viewing the card limit as "disposable income." According to Ölmez, who spoke to TGRT, spending without establishing an income-expense balance creates a situation that strains payment capacity, especially when monthly installments accumulate.

MINIMUM PAYMENT DOES NOT CLEAR DEBT

The minimum payment on credit cards is applied as the lowest amount that must be paid to avoid legal proceedings or delinquency and to ensure the card remains open for use. However, paying only this amount does not mean the total debt is cleared. Interest and fees that continue to accrue on the remaining balance can increase the amount to be paid in subsequent periods.

Ölmez pointed out that consumers with low financial literacy can evaluate their credit card limits independently of their income. Practices such as cash advance options, points, and gift campaigns can also encourage unnecessary spending. This situation makes managing debt more difficult, especially when combined with installment purchases that exceed income.

According to experts, one of the critical mistakes consumers make is trying to pay off existing credit card or loan debt with a new loan. While the "paying debt with debt" method may seem to provide short-term relief, it can carry the debt burden forward instead of eliminating it when a payment plan compatible with income is not established.

For this reason, credit card users are advised to consider their monthly income and mandatory expenses in their spending decisions, not to make the minimum payment option a permanent method, and to calculate the total cost of debt before taking out new loans.

News Source: 12punto