Source
r/AskReddit•
flail

Paying off your credit card every month vs minimum payment

I have heard a few different viewpoints on this matter: I pay my credit card in full every month, but some people have told me that this does not improve my credit. They say that it is better to leave a balance and only pay the minimum due, or a bit more. Others have said it doesn't matter either way. Clearly if you leave a balance you will be paying interest. I'm talking about cold hard credit scores here. Thanks!

Posted Aug 7, 2009, 1:46 AM UTC

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jrchin•

As I understand it, it's better to pay off your cards in full every month. Underwriters look at your debt/income ratio, and any monthly payments you have are going to affect it negatively. If you pay off your account every month, it doesn't even count as a loan, as far as the underwriter is concerned.

As a side note, I've been paying off my credit cards in full every month for many years, and I have a stellar credit score.

3
pbwill95•

My understanding about what is being recorded for credit it is the number of months (for 5 years) that an 'on time' payment is made.

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jrchin•

It's still an on-time payment if you pay it off, though, right?

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pbwill95•

Yeah, as long as its at least the minimum payment and on-time, the credit card company will report an 'on-time' payment to a credit card company.

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PterydactylPr0n•

You more interested in your "credit" or in paying interest? Use the "up to 45 days" interest free period and pay off every purchase before it accrues ANY interest, ie. pay every statement in FULL. Most CC's charge you an annual fee anyway which can be attributed to the "convenience" of having the CC. Why on earth would you WANT to pay interest on purchases? I worry that you even have to ask this question...

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flailOP•

Obviously I believe that its better to not pay interest. I'm just seeking some clarification on which is better to actually build your credit score.

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SuperConfused•

Read this. Specifically the "What it considers" section. This is the same advise Suze Orman and Michael Squier on I will teach you to be rich

I highly recommend the iwillteachyoutoberich site. He really will teach you to be rich. None of this "rich dad poor dad" bull shit. None of this "secret' garbage either. Nothing but factual information that will actually help. I also recommend getrichslowly Both can be tremendous resources.

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MechaAaronBurr•

Both those sites are awesome personal finance tips. I can't recommend them enough.

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flailOP•

Thank you. The first link was helpful and confirmed my thoughts on the matter. I'll be looking into the other two. Thanks!

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SuperConfused•

No problem. Glad to help. There is one thing to keep in mind also, closing older accounts can hurt your score. If you only have one card, and it charges a annual fee, get another one that does not charge a fee, but if the fee is not too outrageous, keep the card so the other one will get some age. Debit cards do not help your credit score. Even if it is a credit/debit card. If you have bad credit, get a secured card. Pay on time, get your deposit back, get a good credit score.

The reason you need a good credit score is not just for buying big ticket items (houses, cars, anything that takes a loan), they also use credit scores for hiring reasons.

My last job would not hire anyone who did not have a FICO credit score of 750. We had to have a corporate card which had a $125k limit (which I maxed out more than once).

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JLGriffin13•

If you can pay it in full, i don't see any reason why you wouldn't. And think about this, if you ever buy food (like at a restaurant or whatever) and you only pay the minimum each month, then when you pay interest, you're paying it on something that is already out your ass and being sucked out of the drinking water....jus' sayin'

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planetmatt•

I pay it off in full so I don't pay interest. I only use the card for the cashback on the Amex and the pulsebeats to buy games from my Sonycard.

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[deleted]•

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