I'm in the process of getting my first card and I heard (from an unreliable source) that it is not a good idea to pay your balance IN FULL each month, but to stick to just paying your minimum balance or higher instead in order to build credit. Is this true? I ask because in an effort to avoid overspending, I was thinking of just like buying a 30 dollar carton of cigarettes each month and then once the bill comes to just pay the whole thing off...but then I heard that was not a good idea.
2006-12-18 12:21:53 · 6 answers · asked by Stephanie B 2 in Business & Finance ➔ Credit
whoever told you that was an idiot!
you should pay off your credit cards every month if you have the means to do so. this will dramatically increase your credit score.
you will definitely build credit by paying off your balances in full each month. in addition, you will not be wasting your hard-earned cash on finance charges.
2006-12-18 12:29:28 · answer #1 · answered by loveholio 5 · 0⤊ 0⤋
I just experienced this problem recently. I have been using a credit card for 6 months now and I pay it off almost immediately every time I charge something. Well, 2 months ago, I shredded my credit card. I do have an automatic $17 charge each month just so I can keep my card active. I checked my credit report the other day and my card is in a "dormant" status because I really don't use it. Knowing that I have paid my card off 4 times in the past few months is great but since I am not using my card as much, my credit score is slightly being impacted. In a way, it helps because you are using your credit responsibly and on the other hand it does not help simply because the credit card company really isn't making any money off you.
2006-12-18 21:13:07 · answer #2 · answered by vsweety 5 · 0⤊ 0⤋
You are getting bad advice. Many Americans are in near ruin financially because of credit cards and they make the minimum monthly payments because that's all they CAN do. PLEASE understand that a credit card is NOT a source to buy expensive items like couches and tv's. Of course you can do that if you choose, but you will soon find yourself with thousands of dollars in credit debt at 20% interest that you cannot pay off until you are 86. The bottom line becomes, don't use a credit card for items that you otherwise cannot afford. It should really just be used as a way to consolidate costs on one bill that you pay off each month and/or for absolute necessities such as new tires that you have to have to keep going to work everyday. Almost every young person makes the credit card mistake. Do something cool and dedicate yourself to not making the same mistake. If you can't afford it out of your regular checking account, don't see your credit card as an alternate source of getting stuff. It should be for emergencies and cash management only.
2006-12-18 20:35:28 · answer #3 · answered by The Scorpion 6 · 0⤊ 0⤋
It doesn't hurt to pay in full, and you save money in the bargain. In fact, carrying a balance can end up hurting your score, although $30 is not going to make much of a difference.
2006-12-18 20:29:43 · answer #4 · answered by RedSoxFan 4 · 0⤊ 0⤋
(The minimum amount that the lender requires to be repaid each month can vary between 2% and 5%) But! if you only pay 2% of your outstanding balance each month, you will barely cover your interest charges and it will take you years to pay off your balance.
2006-12-19 02:14:32 · answer #5 · answered by Shirrwood 2 · 0⤊ 0⤋
No, this is not true.
2006-12-18 20:30:04 · answer #6 · answered by ebistart 2 · 0⤊ 0⤋