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chefpamela100

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Is it best to pay the balance off or make more than the minimum payment?

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chefpamela100

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This question is asked often and the answer is varied as the people asking.   There is a nice article here on Credit Karma that offers good advice.   In my opinion, pay off the balance.  First, consider the interest you pay on a balance.   If your interest rate is 19%, you will pay 19% more than what you owe.  Why pay $119 to someone when you only owe them $100.   The next item to consider is your utilization, this is the amount you owe as opposed to what your credit limit.  The lower this number, the better.   If your credit line is $1000 and you $500 you are at 50%.  Your credit score increases as you lower this number.   30% is considered good by some, while others like 20 and even 10%.  Its best to make your payment before your bill arrives so that the utilization is as low as possible.  Check here on Credit Karma so see when the report your debt and pay it off 3-4 days prior to that date.  You can still carry a partial balance to be reported and then you have the standard 20-25 days to pay the balance without incurring any interest charges.  Don't pay it off weekly to keep the amount as low as possible.   This affects your "highest balance" and some firms use that in their compuations of your score.

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It's "best" for what?... Carrying balance and paying interest dose NOT better your credit scores or credit profiles. What affect your scores is the utilizations, and it's the balance you have on the date when your creditor report to credit bureaus that goes into calculateing your utilizations, that date only, no other dates matter, example, if you maxed your card (not advocating it) but you pay it down/off before it reports? Your utilization won't be scored as 100%, therefore have much less impact to your scores, however, opposite is also true, that even tho you pay in full every month but you paid after it reports for that cycle or you use that card after you paid but before it reports? You will be dinged for whatever utilization percentage was reported... How much one should use their cards are much much less important than how much was reported.

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