Pay off credit card debt in one large payment or monthly payments?

Xaninae

Hi everyone,

Apologies if this has been posted before but I'm new to this forum so I'm currently learning my way around it.

I have two credit cards, both with around £800 on them, which I've had for around 5 months. I've recently started a new job and have the opportunity to pay them off in full. However someone mentioned to me that it will not be good on my credit rating to do this, and instead I should just increase my monthly payments to pay them off over a few months.

I was wondering if anyone has any advice on this, or has had a similar experience?

Thanks!

AnotherJoe

So on the theory of your colleague anyone who pays their card off every month must have a terrible credit rating? Ridiculous. Pay them off asap.

Nebulous2

Are you paying interest on them? If so get them cleared as soon as possible. If they are 0% and you can pay the money into an interest bearing account and manage to leave it there, then that might be an idea until the 0% rate finishes.

redpete

Your colleague is daft (or you've misunderstood what they said)- pay the cards off immediately.

Then carry on using one of them for regular monthly spending and pay it off in full every month.

Superscrooge

Unless they are 0% cards. You should pay them off as soon as you can

planteria

agree with the above.. if paying interest then just clear asap.
if 0% deals then the optimum thing to do is to save up, generating some interest along the way, and then clear at the end of the deal.
for some people though, chipping away at the balance throughout the deal may well be the best/safest option.

AnotherJoe

Even if they are 0% cards the basic premise that paying off the full sum would damage credit score is laughable and needs to be challenged.

planteria

agreed. it wouldn't usually be good use of funds, but it would not cause damage to a credit file.

Anthorn

Xaninae wrote: »

Hi everyone,

Apologies if this has been posted before but I'm new to this forum so I'm currently learning my way around it.

I have two credit cards, both with around £800 on them, which I've had for around 5 months. I've recently started a new job and have the opportunity to pay them off in full. However someone mentioned to me that it will not be good on my credit rating to do this, and instead I should just increase my monthly payments to pay them off over a few months.

I was wondering if anyone has any advice on this, or has had a similar experience?

Thanks!

Paying off a credit card whether fully or partly cannot damage a credit history. However closing the account might well do that if you are left with no other accounts which have run for an equal or greater time. A credit history has accounts which have 3 parts, the length of the longest running account, the overall credit limit across all accounts and the percentage of the overall rolling credit limit used. The account with the highest credit limit may also be considered by for example Experian.

20aday

In the past I used to clear my credit cards in full before the statement was generated owing to past poor financial management.

Potential lenders would look at my credit history and see I had a lot of credit available to me and (subsequently) offer me lower limits (at high interest rates) or decline me outright.

Read a thread on here from a couple of years ago and started paying the balance off after the statement had been produced and before the payment due date.

Worked a treat in the end; I got credit limit increases from two of my credit card providers.

If your balance(s) are attracting interest then it makes sense to clear them in full each month. If they are on a promotional rate then stick it in a high interest current account (as posted above) and earn some interest before it ends.

Maximum_Saving

I had credit card debt in 2013 and 2014. I got fed up with my debt and tried very hard in the last few months to get my credit card balances to zero. I had a payment once a month and using the Internet I also paid once a week. I mangaged to get all of my credit cards paid off by 31 December 2014. In 2015 I saved money in order to pay back a debt to my mum. In December 2015 I closed all of my credit cards except one. I notice one is still shown as in use. However my credit card score hasn't changed. I am still paying for my mortgage. It is important to pay off a zero percent interest credit card before its deal ends.