When Paying On Credit Cards, Which Is Best?

[KillJoy]

To pay a portion every paycheck?

 

OR

 

To save the money from each paycheck, and make one payment per billing cycle?

 

I would like to think that each small payment helps to keeps "some" interest from building.... but I do not know.

 

 

KillJoy

[Main3s]

I pay a little bit each week, $25.00 a pay check, and then I make the minimum payment once a month. So I actually end up paying over every month. I'm not sure if there is a big advantage with it, but I like paying ahead in case I get in a tight spot with $$$.

[John Bruh]

paying a little each week should help. Because intrest is acrude (spelling) daily, so the quicker you pay down the balance the less intrest you pay.

 

But im not sure how your credit card compaines are structured

[88lx5oh]

we pay monthly payment then when we get a nice big chunk every 2 month toss it on the principle.

do the same with car payments as well

[KillJoy]

How can you add the extra (above and beyond the min) to the Principle?

 

KillJoy

[87GT]

Pay off the bill before the end of the month FTW

[John Bruh]

Pay off the bill before the end of the month FTW

 

 

or balance transfer for 0%

[Aaron]

Paying monthly payments is better for your credit (if it needs raised)

 

If your min payment is 100, pay $120+. Credit companies like to see that you can spend and pay responsibly. If you rack up close to limit, then pay it all off, they look at that as not as good as 1k payed over 6 months. Again this is for those that need their credit raised. It shows responsibility and restraint.

 

If your credit is good, then you don't have much of these problems, and probably don't carry a balance anyway.

 

There is however conflicting advice when it comes to keeping a credit card open if you don't use it or if there is 0 balance. Some say you should keep it open and use it once a month and pay it off, others say to close it. It is a bit confusing because credit lenders look at the total you CAN charge. So if you have 5 cards with 10k limit and 0 balance, they still think you are a 50k risk. Recently companies have started to not look at closed credit accounts as a bad thing, so its pretty confusing to know exactly what is best. Obviosuly if you have 10 cards, closing some is a good idea, I think its a matter of discretion.

 

More than you asked I know, but it is something to think about.

[dakotart]

To pay a portion every paycheck?

 

OR

 

To save the money from each paycheck, and make one payment per billing cycle?

 

I would like to think that each small payment helps to keeps "some" interest from building.... but I do not know.

 

 

KillJoy

 

I make the minimum required payment first and then make smaller payments, which go directly to the principal, through the cycle to reduce the total amount owed.

[TTQ B4U]

paying a little each week should help. Because intrest is acrude (spelling) daily, so the quicker you pay down the balance the less intrest you pay. But im not sure how your credit card compaines are structured

 

I agree....pay as much as you can each week if that's how you're paid and can afford it.

 

IMO, if you have more than once with a balance, see if you can consodate them into one card, either an existing one that you negotiate a rate with or apply for a new one at 0% for a specific term. If none of that applies, then for sure pay off the highest rate ones first.

 

Credit cards are evil and addictive. Wean yourself to cash only. You'll certainly spend less when you do.

[neonkiller]

I always switch cards to 0% intrest when the intrest rate increases switch it again.

 

Works everytime most places dont charge when you switch cause they want ur buisness.

[Nitrousbird]

Balance transfer to 0%

 

Most want a 3% transfer fee, so you just have to wait to find one that doesn't. Works like a charm.

 

Then you can just make one payment a month like normal, and it won't matter.

[Zach1647545520]

Right now I'm paying 3times the minimum just to pay off the credit card. I hate debt

[neonkiller]

Balance transfer to 0%

 

Most want a 3% transfer fee, so you just have to wait to find one that doesn't. Works like a charm.

 

Then you can just make one payment a month like normal, and it won't matter.

 

Zing

 

+1

[Zach1647545520]

Balance transfer to 0%

 

Most want a 3% transfer fee, so you just have to wait to find one that doesn't. Works like a charm.

 

Then you can just make one payment a month like normal, and it won't matter.

 

Hmmmm I should do this.

[iwishiwascool]

Paying monthly payments is better for your credit (if it needs raised)

 

If your min payment is 100, pay $120+. Credit companies like to see that you can spend and pay responsibly. If you rack up close to limit, then pay it all off, they look at that as not as good as 1k payed over 6 months. Again this is for those that need their credit raised. It shows responsibility and restraint.

 

If your credit is good, then you don't have much of these problems, and probably don't carry a balance anyway.

 

There is however conflicting advice when it comes to keeping a credit card open if you don't use it or if there is 0 balance. Some say you should keep it open and use it once a month and pay it off, others say to close it. It is a bit confusing because credit lenders look at the total you CAN charge. So if you have 5 cards with 10k limit and 0 balance, they still think you are a 50k risk. Recently companies have started to not look at closed credit accounts as a bad thing, so its pretty confusing to know exactly what is best. Obviosuly if you have 10 cards, closing some is a good idea, I think its a matter of discretion.

 

More than you asked I know, but it is something to think about.

 

A lot of this is incorrect and based on common misconception. Carrying a balance on a card does not necessarily help your credit score. Good payment history should be shown on school loans, car loans, or mortgages. Extending out payments on a debt you could pay off is stupid. Closing accounts, especially old ones, will definitely hurt your score. The amount of available debt potential is not as important as your debt utilization. Under 10% is ideal. Having 50k available to you would put most people in a better score bracket as it would lower their overall debt utilization ratio.

 

Yes, the 3 credit ranking bureaus use complex algorithms that are not completely understood, but taking the above poster's advice will surely have a negative impact.

 

On closing accounts

[Aaron]

A lot of this is incorrect and based on common misconception. Carrying a balance on a card does not necessarily help your credit score. Good payment history should be shown on school loans, car loans, or mortgages. Extending out payments on a debt you could pay off is stupid. Closing accounts, especially old ones, will definitely hurt your score. The amount of available debt potential is not as important as your debt utilization. Under 10% is ideal. Having 50k available to you would put most people in a better score bracket as it would lower their overall debt utilization ratio.

 

Yes, the 3 credit ranking bureaus use complex algorithms that are not completely understood, but taking the above poster's advice will surely have a negative impact.

 

On closing accounts

 

You really didn't say much in your post. You just said I was wrong, with no explanation. Explain what part of what I said is wrong. If you are trying to raise your credit (meaning it is not good and needs to be raised), it is better to show that you can consistently pay on a loan. Having a low credit score but are able to pay off a debt fast one time is not going to raise it much. If you can show some consistency by paying the loan monthly or whatever frequency you want is better.

 

My statements had nothing to do with already having good credit, and that was stated in my post. I also told people about how each company is different and that there is a lot of information out there so it is hard to know exactly what affects your score +/- absolutely.

 

If you have 100k available credit, with 0 balance and apply for a 300k house, more than just your available credit lines are looked at. Payment history as you stated, income etc. If you have good credit and good income and 100k available, this might not be bad, but someone with a low score and modest income with 100k available will surey not help them.

 

Waiting for the responses.............

[Aaron]

From the link provided..........."Of course, credit scores aren't the only thing lenders look at when making decisions. They typically consider other factors, such as your income, assets, employment history and credit limits. Mortgage lenders in particular might look at your total available credit and ask you to close a few accounts as a condition for getting a loan."

[street pilot]

Pay off the ones that cost you the most first. This could be the highest balance, or highest interest rate. With remaining cash pay minimum payment or as much as possible on the rest. Building credit is not a bad thing, you just don't want to kill your finances in the process.

[DOLLAR BILL]

To pay a portion every paycheck?

 

OR

 

To save the money from each paycheck, and make one payment per billing cycle?

 

I would like to think that each small payment helps to keeps "some" interest from building.... but I do not know.

 

 

KillJoy

every pay as much as you can

[DOLLAR BILL]

Pay off the ones that cost you the most first. This could be the highest balance, or highest interest rate. With remaining cash pay minimum payment or as much as possible on the rest. Building credit is not a bad thing, you just don't want to kill your finances in the process.

you al way nock out the little frist once that is gone work on the next biggest one that works good for me.

[NTHER91]

I always switch cards to 0% intrest when the intrest rate increases switch it again.

 

Works everytime most places dont charge when you switch cause they want ur buisness.

 

 

ok although good for your wallet not good for credit it show you being unstable they know what your doing and they will stop offering or approving you for 0% i know i used to see alot of those type people declined ( just cuz it says your pre-approved dosnt mean you get it)

 

keep the longest credit card you have had open

 

pay at least the min payment you do not allocate where your payment does they do

 

if you make more than the min payment every month then the rest is put to the prin. (unless you have a BT ..bal xfer then its applied to that)

 

if you make daliy payment its better cuz your APR is calc. on adb.

 

 

Now if you got all the way through that and didn't cring at the lack of punctuation, well then here are the cliff's.

 

1. pay everyday if you can or every week is ok

 

2. do not jump from 0% card to 0% card find one with a good rate and stay with it, I mean is it so evil of the CC company to make any money off you, they did loan you the money first. but if your gonna jump at least keep the card open a bit after, but dont complain when your credit report shows 40 open accts in the last 5 yrs and you cant get a home loan or car loan( yes ive seen it happen alot)

 

 

3. CC's are evil and no one should open any

[igotaprestent4u1647545491]

ok although good for your wallet not good for credit it show you being unstable they know what your doing and they will stop offering or approving you for 0% i know i used to see alot of those type people declined ( just cuz it says your pre-approved dosnt mean you get it)

 

keep the longest credit card you have had open

 

pay at least the min payment you do not allocate where your payment does they do

 

if you make more than the min payment every month then the rest is put to the prin. (unless you have a BT ..bal xfer then its applied to that)

 

if you make daliy payment its better cuz your APR is calc. on adb.

 

 

Now if you got all the way through that and didn't cring at the lack of punctuation, well then here are the cliff's.

 

1. pay everyday if you can or every week is ok

 

2. do not jump from 0% card to 0% card find one with a good rate and stay with it, I mean is it so evil of the CC company to make any money off you, they did loan you the money first. but if your gonna jump at least keep the card open a bit after, but dont complain when your credit report shows 40 open accts in the last 5 yrs and you cant get a home loan or car loan( yes ive seen it happen alot)

 

 

3. CC's are evil and no one should open any

 

 

agreed, your credit score and be much more important in the long run. then switching cards every year. I've heard its best to keep cards open around 3 years. Credit Cards are not evil in the right hands. Personally I recommend a debit card and a credit card. Even if you charge 5$ a month on the CC it will build your credit history.

 

Also its best to keep 0 balance on your cards, as your credit score is partially determined by you credit line available. If it's constantly maxed out or even at 50%, well guess how your credit score will be.

 

For instance

 

if my memory from class is accurate

 

if you buy a house for 250K at 6% interest 30 years, or you have slightly worse interest at 6.25% because of poorer credit, yada yada,,, I believe you end up paying over 30k more throughout the life of your loan! And thats just a quarter percent, imagine a whole point!

[iwantaturbo]

mkV arron is correct on the # of cards outstanding and what lenders see as risk. but you have to also consider the utilization part of credit too. think of it this way... say you have 2 credit cards, both with $100 limit. and you charge $50 bucks on card 'A'. Now you are 25% utilized. now based on aaron's orig post, you close card 'B' because you are trying to get a re-fi on your home and want as much avail to yourself as possible. Well instead of being 25% utilized you are now 50% utilized, which is BAD. try and keep it under 30% for that top tier credit score...

 

for the OP, it would cost you less in interest to pay every week a little bit, than save up and pay a big chunk (saying the two amnts would be the same). CC's do charge on an average daily balance, so the smaller that figure is, the cheaper it is for the consumer. also you want to pay as early in the billing cycle as possible. if you can't pay the full stmnt bal every month to avoid all finance charges, try paying 10% of bal. if not, then pay min + finance charges, and last if those two aren't an option pay at least the minimum.

 

Paying the min and then another pymnt doesn't put the pymnt directly toward the principle. Payments are allocated as the following... the first part of you payment goes towards any fees and finance charges, then towards the lowest interest rate balance (good info for you 0%-ers) and then up to the highest rate and so on. this brings up an interesting point. if a card will not charge you a 3% fee there is some sort of catch to it, maybe your purchases are at a higher rate so you are paying interest on purchases but not your initial transfer, or they will bang you with all that back interest if you don't transfer it out b4 the promo period ends, or something else...

 

just be careful, keep the balances low (I know times are tough), keep those pymnts coming IN TIME!!! and life of loan transfer options are almost ALWAYS a better deal and less hassle than limited time offers for balance transfers if pying a large amount back that will take you over 1year.

[Aaron]

mkV arron is correct on the # of cards outstanding and what lenders see as risk. but you have to also consider the utilization part of credit too. think of it this way... say you have 2 credit cards, both with $100 limit. and you charge $50 bucks on card 'A'. Now you are 25% utilized. now based on aaron's orig post, you close card 'B' because you are trying to get a re-fi on your home and want as much avail to yourself as possible. Well instead of being 25% utilized you are now 50% utilized, which is BAD. try and keep it under 30% for that top tier credit score...

 

Agreed. I guess I left out the fact that most people looking to raise their credit seem to have a decent # of credit cards.

 

Agreed on most everything also. I knew we were just misunderstanding each others points. Its obvious we both know what we are talking about.