Okay, say you have a credit card bill for $1000 and the minimum payment required is $10. If you only pay that $10 does it go against your credit score, or credit history, whatever it is? My parents told me that if you only pay the minimum and not the entire thing that it counts against your credit history and will ruin your credit. I say bull****. Who's right??
2007-02-21 01:53:39 · 6 answers · asked by WiccaWoman 4 in Business & Finance ➔ Personal Finance
It doesn't ruin your score
but it does show that you are only paying the minimum every month
which in time can be looked at, as a negative
the debt ratio to available credit is what matters
pay off as much as you comfortably pay each month for better score and financial wellbeing
listen to your parents.. they are smarter than we give them credit for
2007-02-21 02:02:41 · answer #1 · answered by Mopar Muscle Gal 7 · 2⤊ 0⤋
Your parents are right. Paying only the minimum payment month after month puts you at risk of being labeled a "slow pay" by that creditor. This happens once you have paid only the minimum payment for 6 or more consecutive months. You will know this because your interest rate on the card will spike. You can see your finance charges double in some cases, as will your new minimum payment.
Your best bet is to pay it off. Why pay your credit card company $100-300 a year for your privilege of carrying a $1000 balance?
2007-02-21 10:03:37 · answer #2 · answered by Anonymous · 1⤊ 1⤋
Paying the minimum is a bad idea. Most of the payment is interest..so you are paying more then you actually spent. It is always a good idea to pay at least double the minimum.
Your CC balance should only be about 30-40% of your credit line. If it is higher, it will effect your credit score.
2007-02-21 12:28:54 · answer #3 · answered by KathyS 7 · 0⤊ 0⤋
What you need to look at is the balance on the card vs. the credit available. If you have a card that is maxed out, it will lower your score, whereas of you are only using 10% of the available credit it will tend to increase the score (slightly).
Better yet, pay it off and cut the card up. It is not smart to borrow money at 18-30% interest.
2007-02-21 10:04:06 · answer #4 · answered by steve.c_50 6 · 1⤊ 0⤋
No, it doesn't go against your credit rating to pay the minimum, as long as you make the payment ON TIME. Late payments will kill you.
However, have you stopped to figure out how long this is going to take you to pay off if you're only paying the minimum?
$1000.00 @ 23% interest with $10 minimum payment will take you 12.916666 years to pay off and you will have paid $1383.00 in interest.
You might want to reconsider and pay more than the minimum payment and get this thing paid off.
2007-02-21 10:06:55 · answer #5 · answered by Faye H 6 · 1⤊ 0⤋
Short term, it won't hurt you. Long term, it will hurt you in a big way. The interested charges will continue to compound, and sooner or later, you'll be in a lot of credit card debt, which is not a good thing. But short term, if you are making the minimum payment, it won't hurt your score. As long as your are making timely payments.
2007-02-21 10:03:03 · answer #6 · answered by dennisjohns23 3 · 1⤊ 0⤋