Is it horrible to not pay off my credit card balance in full?

Question

I know that it is always best to pay off my balance in full but here is my situation:
I got a credit card to try and build my credit and before this billing cycle had only used it once. earlier this month i had car trouble and had to use a lot of my money on car repairs. I turned to my credit card to buy gas, and pay one bill. plus a couple other things, groceries and such. i just checked my balance on the internet and and i don't think i will have the money to pay it all off.
I feel like that is so awful, i know people do it all the time but i don't want to get in debt. plus i feel like it looks bad on my credit. I'm probably just overreacting but could someone reassure me of this, or if I'm wrong tell me so i will know better next time?
Thank You!

Answer 1

just make sure you pay the required monthly amount until you get back on your feet. Don't become delinquent which is much worse for your credit profile.

Answer 2

Hi

First of all, please make sure you pay at least the minimum balance due. As long as you pay the minimum, nothing will happen to your credit score (except that it will go up perhaps). You will also avoid late fees (as much as $45!! sometimes the late fee is more than the amount due!! Don't be late!)

Next, what is the interest rate on your card? Since it is new, it may have a 0% promotional rate? If so, you can feel better about paying only the minimum.

The normal rates on credit cards are typically very high (18% to as much as29%). So it is advisable to pay it off in full as soon as possible. Otherwise, that $100 you spent on gas will end up costing you like $200.

Personally, I do not use a credit card to buy anything I do not already have the money for. And I make sure to pay everything off at the end of the month. The reason I do use a card is to build/maintain my credit rating, and to accumulate points or cash back, depending on the card.

Good luck. Don't worry too much, you sound like a responsible person and should be fine in the long run.

Answer 3

"Horrible" isn't the right word. "Expensive" is a more accurate way to describe your situation. Carrying a balance, especially a relatively small balance, won't seriously affect your credit score, but over time it WILL cost you tons in unnecessary interest charges.

An unexpected car repair is a good example of why financial experts recommend that you build a cash reserve to cover just this type of emergency. In any given month a car repair is unexpected, but over the long haul it's inevitable that your car will break down and need repairs. If you haven't built up a reserve fund to pay for the repairs, you will have little choice but to put it on your credit card and begin paying high monthly interest while you try to figure out a way to pay off the balance.

Answer 4

First let me explain why your instincts are correct:

* the interest costs are extremely high. It might not seem that bad, but if you do the math, interest payments are a huge drain on your finances. Better to collect interest than to pay interest (read the listed source file which explains this). The money you spent on paying interest got you nothing, and spending it had opportunity costs on top of it.

* going into debt to pay for current expenses is a bad sign; it means that your expenses are probably equal or greater than your income. For various reasons, having to do with personal risk, loss of choices, and opportunity costs, it is prudent to have at least 3-6 months worth of living expenses saved up.

* getting into debt will turn into a habit if you let it. Eventually chronic debtors rationalize their concerns away, and just get in deeper and deeper. You probably don't need to talk to them yet but if you ever feel uneasy about your debt, contact the folks at the 2nd link listed. Although I can't endorse them (and in fact I have no debt at all), I like their approach.

>>i feel like it looks bad on my credit

If it is a credit card and you are allowed to carry a balance (not like an American Express card), then you're OK. It will show up on credit reports but only until you pay it off. Make sure you pay the minimum amount due, which will show up on your bill, and make sure you pay it promptly.

Good luck and great prosperity to you.

Answer 5

It is good that you sometimes do not pay it all in full. My friend always paid it and when he went to buy a home, they told him he did not have perfect credit cause he paid everything off right away. They told him that he would need to not always pay it all off cause it gives the card companies money and shows that you need to have some flexibility. DO NOT ever pay the MINIMUM. If you can not pay the whole thing off pay HALF. If you start paying only the minimum you will start paying higher interest. The only time that is not true is with American Express, they want you to pay at least 3/4 of the balance due. If you can try to pay the whole balance in 3 months time. The company will give you a better rating for taking care of it quickly and you get them money, that is the truth! I hate card companies but dealt with them enough to know way to much on how they wok. I will pray that you will find a financial plan that you can live with, without going into debt. PLEASE do not take out any loans or quick loans to pay off your debit. That will damage you in the end. God Bless!

Answer 6

Until you speak with a professional about credit, don't feel badly about your current situation--unless your credit card is American Express, which full balance is due every month.

Credit card companies make money on the interest that you pay, so they only want you to be a slave to the minimums. (You do know, right, that the government stepped in and upped the minimums?)

Anyway, you are so many steps ahead of the game by being concerned about your credit rating. It is our responsibility to learn and be accountable--those of us who are responsible are helping to finance those who aren't.

Creditors are looking at your ability to pay bills on time and your debt-to-earnings ratio.

Keep being responsible--but also talk to credit experts. Bankers are a good starting point.

Yea for you!

Answer 7

Build wealth...not credit... I may sound like an old timer here but start an emergency fund and build it up as soon as possible (3-10x your income). However much you can put towards it even if its only $20/month. In the event something happens you'll have your rainy day fund to turn to. When you get to where you need to be, save or invest the rest. Creditors have this way of making us americans feel (especially when we're 18) like we need to establish credit so we can in turn, build up our credit. It's backwards. Pay off the card, cut it up and close the account as soon as you can. Don't get another one unless your job provides you with an expense account.

Answer 8

Your credit rating has to do with whether or not you pay your bills on time, not if you carry a balance. But I applaud your concern about carrying a balance, most people don't care, they just keep wracking up debt. Pay what you can each month and get it paid off ASAP. Good luck!

Answer 9

As long as you can pay it down under 30% of your credit limit and then pay it off next month, you will be fine.

It's actually kind of nice to hear someone being as responsible with a credit card as you are.

Keep it up and you will have no problems with credit.

Answer 10

i wish all credit cardholders behave and think like you..

rough times do come, and as long as you don't consume more than 50% (or best 30%) of your credit limit, your creditworthiness will remain good.. taking good care of your credit will pay off in the future when you need it most.. so keep up the good habit of not overspending..