Credit & Debt
How revolving interest compounds against you, what actually moves a credit score, and the order to clear debt in.
Why minimum payments never finish
A minimum payment is usually a percentage of the balance, so it falls as the balance falls. Interest accrues daily on the remaining amount. The result is a payoff schedule that stretches for decades on a balance that feels manageable. Switching from a percentage to a fixed monthly amount is the single change that shortens it most.
The grace period, and how it disappears
Pay the statement balance in full and new purchases carry no interest until the next due date. Carry any balance and that grace period is typically forfeited, so interest begins from the purchase date rather than the statement date. This is why partial payment is far worse than it looks.
What actually moves a score
Payment history and credit utilisation dominate. Utilisation is measured against reported statement balances, so paying before the statement closes lowers the reported figure even if your spending is unchanged. A single card near its limit can suppress a score even when the overall ratio is healthy.
Choosing a payoff order
The avalanche method targets the highest rate first and always costs least. The snowball method clears the smallest balance first and produces visible progress sooner, which more people sustain. Whichever you choose, the minimums on everything else must keep being paid, because a missed payment can trigger a penalty rate that erases months of progress.
Transfers and consolidation
A zero percent transfer works only if the balance clears within the promotional window; the fee is typically three to five percent and the post-promotional rate is often higher than where you started. A consolidation loan trades a promotional cliff for a fixed payoff date. Neither helps if the cards refill afterwards.
Debt-to-income, the lender's view
Lenders look at monthly debt payments against gross income, not at balances. Clearing a small balance entirely removes its minimum payment from the ratio, which is frequently the fastest route to qualifying for something larger.
Common questions
Does closing a card help my score?
Usually not. It removes available limit, which raises utilisation, and can shorten average account age.
Is zero utilisation ideal?
A small reported balance often scores marginally better than zero, because zero can read as no active use.