I'm new to credit cards.
I was always under the assumption that paying the full amount that you put on your credit card that month, at the end of every month (right before the due date) was the smart thing to do for your credit card. Which is exactly what I've been doing for the 5 or 6 months since I got my first card.
My friend told me she'd been told differently -- that to leave a small portion of each month's balance over and pay it off more slowly. She said this is good for your credit score.
So which is right? Thanks.
2007-08-23 15:39:43 · 9 answers · asked by Anonymous in Business & Finance ➔ Credit
Pay it in full. There's no benefit to carrying a balance. Paying it in full will actually be better for your credit score as your debt to available credit limit ratio will be much smaller.
Besides, it's silly to pay that interest!
2007-08-23 15:48:29 · answer #1 · answered by bdancer222 7 · 2⤊ 0⤋
You need a balance to build credit. My score was terrible about 6 months ago due to lack of credit usage. You have to be in a debt to build credit. You need to keep balances at 30% of less of the total credit line and make payments. If you score is good to begin with then you don't have anything to worry about.
If you pay off your card each month you are not demonstrating that you can "handle credit". You are choosing to "not deal with it" for lack of better words.
Having "too much" available credit is sometimes viewed negative as well. If you have a lot of available credit you could get yourself in trouble real fast. Since you have no experience handling credit, banks might not want to extend you more in the future.
If you are building credit, charge it up a bit and make payments over several months. I went out and got several credit cards and ran up a small balance on each one of them. I set up auto payments on my bank account so I wouldn't forget any of them. My score increased 60-80 points in 7 months.
2007-08-23 18:32:41 · answer #2 · answered by Richard S. 3 · 0⤊ 0⤋
Your friend is right. If you pay off your credit cards each month in full, it does not show that you have a credit history and then it's not reported to the rating agencies. If you are trying to build up your credit by using a credit card, you need to leave a balance from one month to the next, always pay on time, and then pay it off in about 4 months.
2007-08-23 16:08:16 · answer #3 · answered by annazzz1966 6 · 1⤊ 1⤋
It is good to pay it. The company will like you more. But they will also expect you to spend more. The idea is that you are using the card and continuing to pay - that is what builds your credit. How you do this is up to you, as long as you at least pay the minimum. There has to be some activity on your account in order for it to increase your credit rating.
2007-08-23 15:46:35 · answer #4 · answered by Anonymous · 1⤊ 0⤋
I was in fact watching that Suze Orman show on CNBC the other day and it said that if you carry over 50% of your limit from month to month that its bad. But its always good to pay it off every month. If you can save for what you want to spend money on then do it. If not you shouldnt go over 50% of the limit because it will hurt your credit score.
2007-08-23 16:36:34 · answer #5 · answered by Dave 4 · 0⤊ 0⤋
Either way is fine and will not affect the score enough to matter. What is important is to keep the account in good standing, have longstanding accounts in good standing, keep at least 50 percent or so of what is offered to you available. Eventually you will add an auto loan or personal loan and this will make you or break you. Go to a small, local, credit union for good rates and understanding personnel.
2007-08-23 15:47:16 · answer #6 · answered by chuckyoufarley 6 · 2⤊ 0⤋
Pay off your Credit Card every month. That's the very best.
The interest rates of Credit Cards are 'robbery'.
2007-08-23 22:09:06 · answer #7 · answered by Vampir V 3 · 0⤊ 0⤋
Well, do you care about your credit score, or your financial well-being?
PAY THEM OFF! Your credit score MIGHT lose one or two points, but who cares?!?!?!
Why would you want to pay interest and fees to bump your credit score a few points? Does your employer pay you more if your score goes up? Does your family love you more? Don't make FICO your priority in financial decisions.
www.daveramsey.com
2007-08-23 15:43:59 · answer #8 · answered by Anonymous · 2⤊ 0⤋
the card companies consider people who pay their bills in full "deadbeat customers" thats the actually the term they use,because to them a valued customer is one who misses a payment so they can hit you with the default interest rates
2007-08-23 17:22:34 · answer #9 · answered by Anonymous · 0⤊ 0⤋