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Question By
skywarn477

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0 People Helped
why should I pay off credit cards in full each month
one card that I pay the minimum balance on each month and it is reported as current and paid as agreed. I have a 12 month promo, 0% interest. For the next 11 months, I will pay the minimum and on month 12, I will just pay the remaining balance so I pa no interest. What is so wrong with this plan?

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10% of credit limts should be your goal

Helpful to 4 out of 5 people

There’s not much wrong with paying smaller amounts to a larger debt if that debt isn’t costing you anything in interest to hold onto from month to month…… except when it comes to credit reporting, your score is affected by the amount of available monthly credit limit you are holding as a balance from month to month.  The term for this is called credit utilization, and while it’s generally defined and considered to be a small part of your overall score, most credit scoring models allow for 10% of your score to come from this.  So on an 800+ scoring model, that 10% of your score could actually be up to 80+ points of your overall credit score.  Meaning that your credit utilization is NOT really such small of a detail as suggested and must be managed responsibly to keep it low and your credit score higher.  Meaning, if you carry a monthly balance higher than 10% of your total credit limit, your score is actually lower than what it would be if your monthly balance is 90% of your total credit limit.

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