If you haven\u2019t been paying attention to how often you\u2019ve used your business\u2019 line of credit, you might be in a shock once you open your statement. If it shows a huge balance owing, you may be tempted to fall back on the minimum payment.<\/p>\n
A minimum payment is incredibly handy when money is tight. As either a percent of your balance or a small flat fee, it\u2019s generally a lot easier to cover than the full amount you owe. It gives you some wiggle room should your finances be tied up in other parts of the business.<\/p>\n
But is it a good idea to rely on your minimum payment all the time? Here are some reasons why you should always try to pay your full balance.<\/p>\n
Your minimum payment is the lowest amount of money you may pay and not get hit with late fees<\/a>. You may, however, end up accruing additional interest on any balance that you carry over.<\/p>\n This is true for the average line of credit or credit card \u2014 including both business and personal options.<\/p>\n It\u2019s important to note that many financial institutions like CreditFresh recommend you always use the appropriate product for your needs, so you only ever use a personal line of credit to make purchases for your personal life.<\/p>\n But what kind of purchases does this entail? Admittedly, drawing this line may be hard if you\u2019re an entrepreneur and your business is your life. Something like a CreditFresh Line of Credit by CBW bank is intended to be used for unexpected emergency expenses when your savings won\u2019t cover them. If you need more help, you can visit CreditFresh to get more info<\/a> about a personal line of credit and when you might use one.<\/p>\n At first, it may seem like you\u2019re making the practical choice by paying the minimum payment. You\u2019ll avoid late fees and keep more of your money free for other business expenses, after all.<\/p>\n But ultimately, following this strategy isn\u2019t a good business move.<\/p>\n Remember, interest will accrue on any outstanding balance that moves from one month to the next. Depending on your account, you may also pay finance charges.<\/p>\nReasons Why You Should Pay More When You Can<\/h2>\n
You\u2019ll pay more in interest<\/h3>\n