my limit just went up to abuot 1500 a month. but here is my Q.
If I bought something that was 1000 dollars and by the time the end of the month came up and i only paid the minimum amount or like 100 dollars a month to pay that off...would that mess up my credit? or should I only use my credit card to buy this 1000 dollar item if i have 1000 dollars in my bank? I mean whats the purpose of paying the "minimum amount" or a little higher.
2007-08-17 03:46:16 · 6 answers · asked by mdc2134 1 in Business & Finance ➔ Credit
The purpose of only paying the minimum is that you are essentially deferring payment. You have the $1000 good, and the $1000. But, you are paying the credit card interest because of this little perk so paying the minimum is very rarely a good idea. The only way it would be a good idea is if you were gaining a higher percentage rate on the money (the $1000) than the credit card company was charging you, otherwise you end up losing more with the interest you pay. So say that you bought your $1000 item on credit, and then put $1000 in some investment (it doesn't really matter what it is). If the credit card was charging you 22%, then your investment needs to be making more than 22% for it to be a good idea to only pay the minimum. My recommendation would be to only use the credit card if you can pay off the balance before the statement comes due (2 months at the most). It is really easy to rack up a lot of debt.
2007-08-17 03:56:59 · answer #1 · answered by Bestadvicedude 1 · 0⤊ 0⤋
As long as you make at least your mininum payments on time and do not run a very large credit balance, your credit should be fine. The main thing is your APR, say if it's high, like 18% or more, you really want to try to make more than the minumum payment or it will cost a lot for you. Generally, if you pay less than the minimum, pay late, run a large balance or have quite a few cards, this negatively affects your credit rating. Sometimes it is a good idea to get a card, use it for a larger purchase and pay it within a couple of months. This way you have a credit history when you want to purchase a home etc. and they can see you are responsible.
2007-08-17 10:55:51 · answer #2 · answered by chocoextra 3 · 0⤊ 0⤋
The minimum payment allows you to pay over time.... instead of paying the entire balance in full.
Having a balance close to the limit does lower your score, but it is not nearly as bad as a late payment.... and once you pay it down, your score goes back up. (It has little or no long-term effect)
It's best to pay cash and stay out of debt!
2007-08-17 10:52:18 · answer #3 · answered by Mike 6 · 1⤊ 0⤋
It doesn't matter if you carry a balance from month to month. the only thing that matters on a credit report is that you are making your monthly payments on time.
2007-08-17 10:53:03 · answer #4 · answered by czwtrpolo2 2 · 0⤊ 0⤋
You just don't want to carry maxed out cards. Keep them 30 or so percent below the max.
2007-08-17 10:52:01 · answer #5 · answered by StephanieS 2 · 0⤊ 0⤋
not at all.
2007-08-17 10:53:19 · answer #6 · answered by Michael M 7 · 0⤊ 0⤋