New Delhi, April 26 -- Credit cards are useful for short-term borrowing but come with the highest interest rates in personal finance. Many users believe that paying only the 'minimum due' on their bill keeps them financially safe. This, in turn, only leads to the build-up of credit card bills. Here is a simpler explanation of why paying only the minimum is dangerous.

The minimum payment is usually about 5% of your total outstanding bill. This is the minimum amount you must pay each month on a credit card.

Interest rates on credit cards are quite high, typically around 36% to 42% per year.

Paying only the minimum due removes penalties, but interest continues to accrue on the unpaid balance.

When you pay only a fraction of your bill, in...