As is known, credit cards work through a structure in which banks let customers use limits set by taking into account values such as the cardholder's income, past payment statistics and the total of existing card limits, and in which spending is charged to the customer at set intervals and paid by the customer.
For this reason, cardholders should use a certain part of the limit defined by the bank and must pay what they have used at the end of the statement period.
So should I pay the entire statement balance?
No. When the customer has a debt, the bank sets 2 different payment amounts for the credit card. One is the Minimum Payment Amount, and the other is the Statement Balance.
So what is the Minimum Payment Amount? What happens if we do not pay the Minimum Payment Amount?
We can say that the minimum payment amount on the credit card statement is the part of the monthly debt, arising from credit card spending, that must be paid by the due date. If the specified minimum payment is not made, the account goes into arrears under the contract with the bank, and the credit score is negatively affected.
When only the minimum payment amount of the credit card's monthly installments is paid, the payments do not appear as late; however, since the existing debt will increase, the credit score may drop, even if only slightly. In addition, the bank applies interest at the rate it has set to the rest of the period's debt.
