What is a significant drawback of only making minimum monthly payments on credit cards?

Making only minimum monthly payments on credit cards can significantly contribute to an increase in debt over time. This occurs because the minimum payment often primarily covers interest charges rather than reducing the principal amount owed. As a result, a larger portion of the remaining balance continues to accrue interest, which can lead to a cycle of debt. Over time, this can make the total amount owed grow, as the borrower may find themselves paying much more in interest over the lifespan of their debt.

In contrast, other options focus on either perceived benefits or incorrect implications regarding the minimum payment approach. Building a better credit history, while possible with timely payments, does not outweigh the negative effects of accumulating interest. Strengthening personal finance habits typically requires more than just making minimum payments, as those do not promote effective budgeting or proactive debt management. Additionally, making minimum payments may not lead to favorable changes in interest rates on future loans since credit utilization ratios and other factors are also considered by lenders when assessing risk.