Paying off balances

edited 30 November -1 at 1:00AM in Credit Cards
6 replies 715 views
dominoddominod Forumite
13 Posts
edited 30 November -1 at 1:00AM in Credit Cards
Hi all,

Ignoring the obvious costs incurred by interest, should you always pay off your balance in full every time?

I'm sure I remember reading something, somewhere, that paying off a lot more than the minimum but not the full balance can help build up history in a positive way?

Replies

  • YorkshireBoyYorkshireBoy Forumite
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    It's not necessary to 'buy' a good credit history by incurring interest deliberately, so whoever said/wrote that is talking nonsense. If you can afford to pay it in full, then do so. If you can't afford to pay it in full, then pay more than the minimum payment (this is because credit reports contain minimum payment markers these days).
  • I always pay above the minimum regardless. I'll pay off the full amount long before the statement or balance due date sometimes too; I switch between the two methods.

    So, paying off in full is always better?
  • YorkshireBoyYorkshireBoy Forumite
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    dominod wrote: »
    I always pay above the minimum regardless. I'll pay off the full amount long before the statement or balance due date sometimes too; I switch between the two methods.
    Unless you're carrying a revolving balance, always wait for the statement to be produced before paying. This is better for your credit file, and therefore your credit rating.
    So, paying off in full is always better?
    Always, unless it's a 0% deal.
  • m4rcm4rc Forumite
    315 Posts
    Pay more than the minimum, but (and I will not be liked for this but hey whatever) I don't see the point in building up credit limits if you buy things and lay it off straight away. I don't earn enough to spend 10k on something and then pay it off a month later, if you are very rich you can spend and pay it off so you never pay interest, then you magical/fake credit rating score increases and you can get more credit that you don't really need....

    I don't get it myself, as long as the APR is reasonable and you pay it off as quickly as you can credit is a good way of treating yourself, covering an emergency, paying for something unexpected, paying a bill, a holiday, all sorts of things.

    The only important hing in my own personal opinion is you need to know how this stuff works. Understand the APR and how that's an annual rate and you pay a percentage of that on the balance per month, understand how many years and how much it would cost if you only paid the minimum, understand the importance of not missing a payment date etc. Mainstream credit cards are so much better than some dodgy payday loan with 10000% APR, if you get the debt cleared in good time it's a fine way of having things that you may not otherwise be able to afford.

    If on the other hand you struggle to pay your bills and make it through the month then a credit card, no matter how much you spend or the interest rates on them, are terrible things. Even a £200 debt on a sub-prime credit card like capital one or Vanquis can become a huge ongoing debt if you only pay the minimum or fail to pay at all.

    Be sensible and pay what you can :)
  • CLAPTONCLAPTON Forumite
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    m4rc wrote: »
    Pay more than the minimum, but (and I will not be liked for this but hey whatever) I don't see the point in building up credit limits if you buy things and lay it off straight away. I don't earn enough to spend 10k on something and then pay it off a month later, if you are very rich you can spend and pay it off so you never pay interest, then you magical/fake credit rating score increases and you can get more credit that you don't really need....

    I don't get it myself, as long as the APR is reasonable and you pay it off as quickly as you can credit is a good way of treating yourself, covering an emergency, paying for something unexpected, paying a bill, a holiday, all sorts of things.

    The only important hing in my own personal opinion is you need to know how this stuff works. Understand the APR and how that's an annual rate and you pay a percentage of that on the balance per month, understand how many years and how much it would cost if you only paid the minimum, understand the importance of not missing a payment date etc. Mainstream credit cards are so much better than some dodgy payday loan with 10000% APR, if you get the debt cleared in good time it's a fine way of having things that you may not otherwise be able to afford.

    If on the other hand you struggle to pay your bills and make it through the month then a credit card, no matter how much you spend or the interest rates on them, are terrible things. Even a £200 debt on a sub-prime credit card like capital one or Vanquis can become a huge ongoing debt if you only pay the minimum or fail to pay at all.

    Be sensible and pay what you can :)

    if you 'treat' yourself, you still have to pay the money back plus the interest
    this means you must have 'spare' money each moth to be able to pay the debt plus interest back
    So better to use that spare money to save : so you get your treats and never pay any interest
  • No_6No_6 Forumite
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    If it is a 0% purchase or a low % BT card deal, I have never paid more than the minimum payment.
    Always pay in full when the deal is about to end though.
    Never had or have any problems with getting any new cards,
    after closing used ones.
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