Is it good to maintain a balance on your credit card?

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Stojakapimp

Platinum Member
Jun 28, 2002
2,184
0
0
I've heard that it is good for your credit score to always maintain a balance on your credit card instead of paying it off in full. Is this true?

Also, if you do maintain a balance, albeit a very small one, do you incur any interest on that balance? I believe that when purchases are made, you have a grace period to pay off that purchase before interest is applied. And when you make payments to your credit card balance, the payment goes toward the oldest purchases first. If that's the case, and I make a lot of purchases with my credit card yet pay off most of it each month, then I shouldn't be accruing any interest.

does that make sense?

Thanks!
 
kranky

kranky

Elite Member
Oct 9, 1999
21,019
156
106
There is zero benefit to carrying a balance. It does not help your credit score in any way.

Regarding interest, your card probably has a grace period for new purchases IF the new balance is paid in full. If you don't pay in full, then there's no grace period. That's common, but not universal.

Your card's terms and conditions will explain how interest is accrued, so that's the place to look.
 
SandEagle

SandEagle

Lifer
Aug 4, 2007
16,809
13
0
I owe 5k on one card. I closed it yesterday because I can't control my spending. will this affect my score? I'm still making payments.
 
Brainonska511

Brainonska511

Lifer
Dec 10, 2005
29,025
14,364
136
facepalm.jpg
 
S

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
NO! It is not a good idea at all in fact it HURTS your credit score because your percentage of revolving credit is higher.

Just use the card and pay it in full every month. You'll still show some balance on it from using it and you won't be throwing away money in interest.
 
Svnla

Svnla

Lifer
Nov 10, 2003
17,986
1,388
126
Noooooo!!!!

You do NOT need to keep any balances on any credit cards for good credit scores.

Steps to get good credit scores:

1. No late or missed payments, EVER!!! (35% of the score)
2. 30% of credit line usage or less, 10% is best (30%)
3. Long duration of credit history, ie. the longer you have credit cards = better (15%)
4. No unnessary credit opennings/inquiries (10%)
5. The right mix of credits -credit cards/loans/etc. (10%)

That is all for today ATOT Financial 101 lesson. You are welcome. :)

<<---been following the 5 steps above and have great credit score (800s range).
 
Last edited:
Svnla

Svnla

Lifer
Nov 10, 2003
17,986
1,388
126
SandEagle said:
I owe 5k on one card. I closed it yesterday because I can't control my spending. will this affect my score? I'm still making payments.
Click to expand...

Well, if I was you, I would cut off the card so I could not use it but still leave the account open (see step #3 of my previous post) but you already closed it. What done is done.

Now do everything you can to pay off that 5K as fast as you can unless you have 0&#37; interest on it but I doubt CC companies still give out 0%.

OP, if you don't pay off the whole balance by the due date, then you WILL pay interest on whatever left after you made the payment.

Highland.. :)

I think we need to have a Finance/Money Management subforum and I am volunteering to be the mod...what do you say, Mods? :)...wait..no salary? That is not good for my financial health..hehehehehe
 
Last edited:
nick1985

nick1985

Lifer
Dec 29, 2002
27,153
6
81
Svnla said:
Well, if I was you, I would cut off the card so I could not use it but still leave the account open (see step #3 of my previous post) but you already closed it. What done is done.

Now do everything you can to pay off that 5K as fast as you can unless you have 0% interest on it but I doubt it.
Click to expand...

He is just trolling you, incase you didnt know by now
 
rudder

rudder

Lifer
Nov 9, 2000
19,441
86
91
Svnla said:
Noooooo!!!!

You do NOT need to keep any balances on any credit cards for good credit scores.

Steps to get good credit scores:

1. No late or missed payments, EVER!!! (35% of the score)
2. 30% of credit line usage or less, 10% is best (30%)
3. Long duration of credit history, ie. the longer you have credit cards = better (15%)
4. No unnessary credit opennings/inquiries (10%)
5. The right mix of credits -credit cards/loans/etc. (10%)

That is all for today ATOT Financial 101 lesson. You are welcome. :)

<<---been following the 5 steps above and have great credit score (800s range).
Click to expand...

Cash is king! That is my lesson. You can buy a house without a FICO score. Join a credit union if you need to get a loan for a car. The idea that you need to use credit cards or get a loan just for your FICO score is crazy and gets a lot of people in trouble.
 
S

Stojakapimp

Platinum Member
Jun 28, 2002
2,184
0
0
Thanks for the help everyone. Guess what I heard was wrong then. I'll go ahead and just pay my credit card off in full then. I hardly use it currently, but I figured it'd be good to start using it, paying it off, and earning points on my card.
 
U

Udgnim

Diamond Member
Apr 16, 2008
3,681
124
106
when you use a credit card, the credit card company collects a small fee from that business

it's a bonus to the credit card company if someone chooses to keep a balance on their monthly bill
 
sdifox

sdifox

No Lifer
Sep 30, 2005
100,648
18,006
126
Stojakapimp said:
I've heard that it is good for your credit score to always maintain a balance on your credit card instead of paying it off in full. Is this true?

Also, if you do maintain a balance, albeit a very small one, do you incur any interest on that balance? I believe that when purchases are made, you have a grace period to pay off that purchase before interest is applied. And when you make payments to your credit card balance, the payment goes toward the oldest purchases first. If that's the case, and I make a lot of purchases with my credit card yet pay off most of it each month, then I shouldn't be accruing any interest.

does that make sense?

Thanks!
Click to expand...

not paying it off on time will always incur interest. And not just on the outstanding amount.

The only benefit is the CC company gets to make more money off you.
 
Svnla

Svnla

Lifer
Nov 10, 2003
17,986
1,388
126
rudder said:
Cash is king! That is my lesson. You can buy a house without a FICO score. Join a credit union if you need to get a loan for a car. The idea that you need to use credit cards or get a loan just for your FICO score is crazy and gets a lot of people in trouble.
Click to expand...

Cash is king IF a person can NOT handle CCs/loans correctly.

No, I NEVER said let run out and get a bunch of CCs and loans "just for your FICO score" as you stated. Read the list of my op in this thread again. See #1? Very very important, that's why it is #1 on the list. If you can't do that, you have no business to get CCs or loans whatsoever.

Did you know that beside home purchase and car loan, credit scores are being used for employment, insurance rating/charging purposes, properties rentals, cell phone service, utility services, etc....shall I go on? How "cash is king" will work then? Oh, do you know how much fun to rent a car/get a hotel room/pay for gas at the pump/etc. with your debit card?

CC's also vey helpful to dispute with merchants, or buyer protection, extra warranty, miles for travel, points to converse to cash, and in my case, cold hard cash back (extra money in my pocket in which cash will not be able to provide).

Don't take my words for it. Here are a few links to support my case:

http://articles.moneycentral.msn.co...ing/your-5-minute-guide-to-credit-scores.aspx

http://articles.moneycentral.msn.co...ing/meet-the-credit-score-perfectionists.aspx

Now your turn to defense your stance of "cash is king". Let us see some links/sources.
 
Last edited:
highland145

highland145

Lifer
Oct 12, 2009
43,973
6,338
136
Svnla said:
Did you know that beside home purchase and car loan, credit scores are being used for employment, insurance rating/charging purposes, properties rentals, cell phone service, utility services, etc....shall I go on? How "cash is king" will work then?
Click to expand...
That one still pisses me off even though my fico is 800+
 
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