What is the impact of making only minimum payments on my debt?

Making only minimum payments on your debt can have several negative impacts. First, it can significantly increase the amount of interest you pay over time, as interest accrues on the remaining balance. This means that you will end up paying more in interest charges over the life of the debt, which can be a significant financial burden.

Second, making only minimum payments can extend the length of time it takes to pay off the debt. This is because the minimum payment is often set at a level that will pay off the debt over a very long period of time, sometimes 20 or 30 years, depending on the size of the debt and the interest rate.

Third, making only minimum payments can hurt your credit score. Your credit utilization ratio, which is the amount of debt you have compared to your credit limit, is an important factor in determining your credit score. If you only make minimum payments, it will take longer to pay off your debt and your credit utilization ratio will remain high, which can lower your credit score.

Overall, making only minimum payments on your debt can lead to a cycle of debt that is difficult to escape, so it is important to pay as much as you can afford each month to reduce your debt as quickly as possible.