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Posted: 3/17/2013 11:07:18 AM EDT
[Last Edit: 3/17/2013 11:07:39 AM EDT by mycarsifarst]
Are there any downsides to paying off CC debt in full, instead of in installations? I'm trying to get out of debt, about $1,500, as fast a possible. I'm renting right now, no car payment. I would be using my refund to do this.
Link Posted: 3/17/2013 11:10:50 AM EDT
nope
Link Posted: 3/17/2013 11:10:52 AM EDT
$1500 bucks is a fart in the wind, pay in lump sum and be done with it.
Link Posted: 3/17/2013 11:11:16 AM EDT
None in regards to credit wise.
Link Posted: 3/17/2013 11:12:06 AM EDT
If you have the dough, why pay the interest? Just knock it out.
Link Posted: 3/17/2013 11:13:37 AM EDT
[Last Edit: 3/17/2013 11:14:03 AM EDT by mycarsifarst]
awesome. thanks for the feedback.

now...what to do with the rest of the refund?
Link Posted: 3/17/2013 11:14:31 AM EDT
Everyone always says pay it of ASAP.

But, after some trial runs over the past 3-4 years, paying off in installations helped my rating more.

I'll put like $200 on a $1500 card, and just pay the minimum times 2 or 3 for a few months. Usually like $60.
Link Posted: 3/17/2013 11:15:43 AM EDT
Originally Posted By mycarsifarst:
awesome. thanks for the feedback.

now...what to do with the rest of the refund?


My mailing address is awaiting your beck and call.
Link Posted: 3/17/2013 11:16:04 AM EDT
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.
Link Posted: 3/17/2013 11:16:10 AM EDT
No downside at all. The CC companies are now legally charging a vig that would make Dominick and Nunzio blush in the old days.
Link Posted: 3/17/2013 11:17:45 AM EDT
Only if you're carrying a balance for a reason (IE an interest free promotional period).
Link Posted: 3/17/2013 11:20:04 AM EDT
Originally Posted By wootizzle:
Everyone always says pay it of ASAP.

But, after some trial runs over the past 3-4 years, paying off in installations helped my rating more.

I'll put like $200 on a $1500 card, and just pay the minimum times 2 or 3 for a few months. Usually like $60.


How much in interest has this strategy cost you?

I have had zero credit card debt for 15 years and have fantastic credit.
Link Posted: 3/17/2013 11:21:02 AM EDT

Originally Posted By macro:
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.

Paying your credit cards off completely can actually lower your credit score. The score isn't just an indicator that you pay off your debt. It is also an indicator of how likely you are to go in debt and carry a balance, along with making monthly payments. The companies that care about credit do so because they want to make money off your interest and fees. If you pay your debts off monthly then they collect no interest. You are not their ideal customer and your credit score could reflect that.

But I say screw it and pay it off. The goal is not to carry any debt anyway, which is what the credit score primarily indicates.
Link Posted: 3/17/2013 11:25:34 AM EDT
Link Posted: 3/17/2013 11:28:32 AM EDT
Pay in full, EVERY DAMN MONTH.
Get a "Frequent Flyer" card, put everything you can on it, pay the balance every month, fly free, or at next-to-nothing.
We've had some nice trips, with transportation costing nothing.
Another option, once you are paying in full every month, are the "cash-back" cards.

Both the frequent flyer and the cash-back cards will often try to hit you up with an annual fee after the first year- just call 'em up and tell 'em you're gonna cancel- most times, they'll waive the fee- if they don't, just go get another one.

I had been told this would somehow ding your credit rating (# of new accounts), but I haven't seen it.

When buying big ticket items with cash, negotiate a cash discount- ALWAYS. it's amazing how much you can save.
Link Posted: 3/17/2013 11:31:30 AM EDT
[Last Edit: 3/17/2013 11:34:32 AM EDT by wootizzle]
Originally Posted By mcnizzle:

How much in interest has this strategy cost you?

I have had zero credit card debt for 15 years and have fantastic credit.


The one I do it with is like 6.9% or some bullshit. So, Maybe $100-$120 bucks over the past 2 years.

$100 for my credit to jump from bad, to a few points below [what's considered] "excellent", at 23 into 24. Shiit. I'll take it.
Link Posted: 3/17/2013 11:39:19 AM EDT
I never carry a balance and have over an 800. I use my card a lot, but don't carry debt.
Link Posted: 3/17/2013 11:42:05 AM EDT
what to do with the rest of your refund?

Set up an emergency fund of at least $1,000, then fully fund it over time to equal 6 months of your normal earnings.


Link Posted: 3/17/2013 11:42:25 AM EDT
Did that years ago, now I use it and pay it off every month and get free shit.
Link Posted: 3/17/2013 11:43:50 AM EDT
Originally Posted By M4Madness:
I pay my credit card balance off in full each and every month -- sometimes it's in the hundreds, sometimes it's in the thousands. The last time I checked my credit rating, it was in the 830's, so it certainly hasn't hurt my score any.


Same here, if I can't afford to pay it off each month I don't get it out. If you pay your bills there isn't any risk of having a credit issue.
Link Posted: 3/17/2013 11:44:32 AM EDT
Pay off 95%

This keeps some balance so it looks like you're using the card.

Put a few dollars a month on, but keep the balance below $100.

That way you're basically paying hardly any interest, but it still looks like you're using the card so you build credit.

Link Posted: 3/17/2013 11:46:13 AM EDT
[Last Edit: 3/17/2013 11:47:36 AM EDT by Fella]
Originally Posted By mcnizzle:
Originally Posted By wootizzle:
Everyone always says pay it of ASAP.

But, after some trial runs over the past 3-4 years, paying off in installations helped my rating more.

I'll put like $200 on a $1500 card, and just pay the minimum times 2 or 3 for a few months. Usually like $60.


How much in interest has this strategy cost you?

I have had zero credit card debt for 15 years and have fantastic credit.


If you have no credit or bad credit that is the quickest way. Nowadays you can just use the card and pay in full also, it still shows up pretty close to the same on your credit. Interest on a $200 isn't that much, you make it sound like he's carrying 30k on a card.
Link Posted: 3/17/2013 12:00:16 PM EDT

Originally Posted By mycarsifarst:
Are there any downsides to paying off CC debt in full, instead of in installations? I'm trying to get out of debt, about $1,500, as fast a possible. I'm renting right now, no car payment. I would be using my refund to do this.

No, it makes no difference providing that you keep using the card and paying it off every month.

You credit card company batch reports to the CRA's the following information about customer accounts:
  1. Credit limit
  2. Current balance
  3. Last Activity date
  4. Length of time the account has been held
  5. Paid as agreed or 30/60/90/charged-off/settled/closed-by-consumer etc.

They do not report whether you paid interest or not.

Note that the date they report may or may be your statement date, or some other date, so unless you pull your full credit report, you won't know what the balance reported actually is. For example: I know that my one credit card closes on the 17th of the month, but they report at the end of the month.

If you pay the card off and then never use it, your credit score will atrophy because credit scoring is designed to measure how well you USE credit. If you don't USE credit, you're considered a deadbeat because nobody has a chance to make any money from you, and there were no payments for you to miss.

Your score is negatively effected (for revolving debt as opposed to installment debt) if you use more than 30% of your available credit.

Length of time the account has been held, your payment history (paid as agreed) and last activity (for revolving debt) are most important to a score.

Link Posted: 3/17/2013 12:01:20 PM EDT

Originally Posted By mustangduckk:
Pay off 95%

This keeps some balance so it looks like you're using the card.


Put a few dollars a month on, but keep the balance below $100.

That way you're basically paying hardly any interest, but it still looks like you're using the card so you build credit.


Wrong. Utterly and completely, wrong.

That is not how reporting on revolving debt works.
Link Posted: 3/17/2013 12:02:54 PM EDT
[Last Edit: 3/17/2013 12:03:10 PM EDT by sporter]
Just pay it off (if you can).

Been there done all that with credit card debt.

I still use the cards for almost everything (for convenience and security) however I have the money to pay them off on a weekly basis.

Link Posted: 3/17/2013 12:03:16 PM EDT
Originally Posted By seven-six-two:

Originally Posted By mustangduckk:
Pay off 95%

This keeps some balance so it looks like you're using the card.


Put a few dollars a month on, but keep the balance below $100.

That way you're basically paying hardly any interest, but it still looks like you're using the card so you build credit.


Wrong. Utterly and completely, wrong.

That is not how reporting on revolving debt works.


Every "financial professional" I've talked to has told me something different. I've talked to people that work for credit card companies, people at the bank, loan officers, etc...

so if you have some golden nugget of knowledge, feel free to enlighten the class. Don't forget to cite your sources.

Link Posted: 3/17/2013 12:11:50 PM EDT
Originally Posted By mycarsifarst:
awesome. thanks for the feedback.

now...what to do with the rest of the refund?


It sounds like you might want to consider saving it.
Link Posted: 3/17/2013 12:14:00 PM EDT
Originally Posted By SWIRE:

Originally Posted By macro:
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.

Paying your credit cards off completely can actually lower your credit score. The score isn't just an indicator that you pay off your debt. It is also an indicator of how likely you are to go in debt and carry a balance, along with making monthly payments. The companies that care about credit do so because they want to make money off your interest and fees. If you pay your debts off monthly then they collect no interest. You are not their ideal customer and your credit score could reflect that.

But I say screw it and pay it off. The goal is not to carry any debt anyway, which is what the credit score primarily indicates.


People always told me that, yet my score was in the mid to high 700's when I carried some debt, and has never been below 800 since maintaining a zero balance. I know there are other factors, but for what it's worth, my credit got better. Might have nothing to do with the balances....maybe even in spite of them.....I would still encourage anyone to live debt free.
Link Posted: 3/17/2013 12:47:30 PM EDT
Originally Posted By macro:
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.



yep


The CC folks need people like us to float all of the deadbeats.....

Link Posted: 3/17/2013 12:55:44 PM EDT
What credit card?
I live without them.

My moto is this: If I don't have money in my bank to spend, I don't need to spend it.

Everything else I buy cash.
Link Posted: 3/17/2013 12:59:37 PM EDT
I will be the odd man out. Do NOT pay your credit cards 100% off every month if you want to get a very high credit score. Trust me.
Leave a small balance. Stupid? I agree, but to get a high score you have to play the game.
Game I play, cars...paid off.
Credit cards, little balance every month. Pay towards every month.
Link Posted: 3/17/2013 1:02:22 PM EDT
PAID IN FULL


its a great lifestyle, once you get there.
Link Posted: 3/17/2013 1:03:00 PM EDT
Originally Posted By Deussne:
What credit card?
I live without them.

My moto is this: If I don't have money in my bank to spend, I don't need to spend it.

Everything else I buy cash.


I use my CC for pretty much everything. Rent, utilities, gas, groceries, guns, ammo, McDonalds- you name it.

I use the USAirways card for the miles. I live in AZ, my wife lives in NC (geobachelor, for those military folks). She'll fly here in May, for the grand price of $10, round trip. This will be the second trip, the first was $85 because I booked within 21 days of flying.

So far, the card has been pretty well worth it, considering I've paid no interest.

Credit cards are a tool. When used properly, a good tool.
Link Posted: 3/17/2013 1:04:41 PM EDT
"When it comes to interest, there are two types of people: Those who understand it, earn it. Those who don't, pay it."
Link Posted: 3/17/2013 1:05:01 PM EDT
Originally Posted By mustangduckk:
Originally Posted By seven-six-two:

Originally Posted By mustangduckk:
Pay off 95%

This keeps some balance so it looks like you're using the card.


Put a few dollars a month on, but keep the balance below $100.

That way you're basically paying hardly any interest, but it still looks like you're using the card so you build credit.


Wrong. Utterly and completely, wrong.

That is not how reporting on revolving debt works.


Every "financial professional" I've talked to has told me something different. I've talked to people that work for credit card companies, people at the bank, loan officers, etc...

so if you have some golden nugget of knowledge, feel free to enlighten the class. Don't forget to cite your sources.



If I was in the loaning money business I would advise you to never completely pay them off too.

If I worked at Blockbuster Video I would encourage people to turn in their movies 2 days late every time too. I maximizes viewing pleasure.

Link Posted: 3/17/2013 1:06:42 PM EDT
Originally Posted By GarandM1:
"When it comes to interest, there are two types of people: Those who understand it, earn it. Those who don't, pay it."


Yep.

No mortgage.
No vehicle loans.
Credit cards paid in full every month.

Link Posted: 3/17/2013 1:07:52 PM EDT
Originally Posted By macro:
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.


Me too.

Came close to not paying it off at the end of the month once or twice though.
Link Posted: 3/17/2013 1:14:45 PM EDT
Originally Posted By mycarsifarst:
Are there any downsides to paying off CC debt in full, instead of in installations? I'm trying to get out of debt, about $1,500, as fast a possible. I'm renting right now, no car payment. I would be using my refund to do this.


I paid my CC off in full every month for a year/year and a half. I read reports online that said it wouldn't improve your score, they were right and in my situation paying in full didn't improve my score. After that I would keep a small balance on my card so it would get reported as being used. After a few months of that my credit score started going up. If your trying to build your score up I would pay all but lets say 10% of the balance off.
Link Posted: 3/17/2013 1:15:25 PM EDT
Originally Posted By KalihiJack:
None in regards to credit wise.


Link Posted: 3/17/2013 1:15:46 PM EDT
Paid in full every month.
Link Posted: 3/17/2013 1:26:36 PM EDT
Pay it off. DO IT!
Link Posted: 3/17/2013 1:28:43 PM EDT
[Last Edit: 3/17/2013 1:29:49 PM EDT by Colt_sporter]
This is ARFCOM where everyone has atleast an 800 credit score with no debt and 12" dick. Geez man get with the program




ETA: And also divorced and are the worse group of boaters known to man.
Link Posted: 3/17/2013 1:32:10 PM EDT
I use CC for almost everything,
Pay in full each month...
I get cash back every month, nothing like free money....
Plus my CC offers other perks and benefits, double warranties, free ins, the list goes on, in the event of bad retailer or transaction they step in a take care of the issue

Link Posted: 3/17/2013 1:33:10 PM EDT

Originally Posted By macro:
Zero balance at the end of every month here....I haven't carried a balance in over a decade....never going back to that life.

Want to build credit? Pay off your debts.


Link Posted: 3/17/2013 1:37:26 PM EDT
Originally Posted By ScopeEye:
I use CC for almost everything,
Pay in full each month...
I get cash back every month, nothing like free money....
Plus my CC offers other perks and benefits, double warranties, free ins, the list goes on, in the event of bad retailer or transaction they step in a take care of the issue



+87 in cash back and reward points
Link Posted: 3/17/2013 1:49:38 PM EDT
[Last Edit: 3/17/2013 1:50:49 PM EDT by wareagleA5]
Your score will go up because you are lowering your utilization rate, but you need to leave some kind of balance on the card, I've heard 10% is best to show that you are using credit. If you really want to optimize your credit score quickly you can call the card company and ask them the date they report and make sure you pay off a large lump sum before that date. Remember the date they report may be different than your billing cycle.

30% of your credit score is based on your credit utilization rate. That’s the amount of available credit you are using: if you have a credit card with a $10,000 balance and you owe $5,000 on it, your utilization rate is 50%. Generally, your utilization rate should be 30% or lower to avoid having a negative effect on your credit score, but clearly the lower your utilization rate, the better. Your credit score doesn’t consider your income at all, so your overall debt ratio is not part of the calculation.
Link Posted: 3/17/2013 1:53:48 PM EDT
The American way would be to pay the minimum for the rest of your life.
Link Posted: 3/17/2013 1:56:52 PM EDT
I think credit rating is mostly average card life and debt to credit ratio. Then its missed payments, late payments workimg the other directiom
Link Posted: 3/17/2013 1:57:49 PM EDT
Although there something to be said about zero debt, it won't do your credit score any favors.

In addition, there is something to be said for liquidity.

I'd echo the sentiment that you should pay off almost all of your credit card debt.
Link Posted: 3/17/2013 2:06:01 PM EDT
Originally Posted By wootizzle:
Everyone always says pay it of ASAP.

But, after some trial runs over the past 3-4 years, paying off in installations helped my rating more.

I'll put like $200 on a $1500 card, and just pay the minimum times 2 or 3 for a few months. Usually like $60.


this is fucking stupid, your paying interest to improve your credit score
Link Posted: 3/17/2013 2:14:37 PM EDT

Originally Posted By wareagleA5:
Your score will go up because you are lowering your utilization rate, but you need to leave some kind of balance on the card, I've heard 10% is best to show that you are using credit.

Wut?

You're using credit by using a credit card.

Pay the damn thing off every month. Why pay high rates of interest for any reason?
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