0
Is it better to pay the full amount or the minimum amount on a credit card?
Wiki User
∙ 16y ago
It is nearly always better to pay a credit card balance in full BEFORE the billing cycle closes. I say "nearly" because it really depends on how a person wants to be seen: as a "deadbeat" or as a "revolver". These are credit card industry terms that describe the two types of credit card users. A deadbeat pays their balance in full every month, on time, preventing the credit card company from applying any interest to the unpaid balance. (Hence the term "deadbeat). If a person does NOT pay the balance in full each month and carries a balance forward to the next billing cycle, they will be known as a "revolver" because they carry a revolving balance to which the credit card issuer will apply an interest charge. Depending on the balance carried, a revolver can pay a big bag of money in interest over time depending on the rate of interest the card issuer charges. My suggestion for building a good credit rating with a credit card issuer: when making purchases on a a credit card, try to keep the balance somewhere between 15% and 40% of the credit card limit. Less than 15% and the card company doesn't see you as a viable user, more than 40% and your ratio of consumed to available credit gets too high, causing the card issuer to view you as a higher credit risk. Do not wait for the bill to come. Know when the billing cycle closes and be certain that the payment gets to it's destination BEFORE the date the billing cycle closes. (Many card companies play games with the "time" that the payment must be received on a given date. If the payment arrives after that time on that day, LOTS of not nice things can happen - so watch out!) I recommend allowing the credit card issuer to make a little money - but on THE CONSUMER'S terms. This is how: When paying the bill, pay all but $10 to $15 of the balance. That small remaining balance permits the card company to assess an interest charge. The next month, pay the ENTIRE balance (in full). Following this plan your credit score will slowly rise and after a period of time (provided all other debt is paid as agreed) you will be inundated with more card offers than you may want. Be careful. I see a LOT of people in trouble with credit cards. It's an excellent idea to have insurance (not through a credit card company) that will pay the monthly debt if one is unable to work for any reason. Credit card companies are in business to make money. They have no compassion for unfortunate circumstances (no matter how good you think your excuse is for not paying on time). Protect yourself and use credit to YOUR advantage. Again, be careful. This can be very dangerous territory where one wrong step can follow you for many years.
Wiki User
∙ 16y ago
Add your answer:
Earn +20 pts
Why is it unwise to pay minimum credit on your credit card?
Paying only the minimum due on your credit card balance maximizes the amount of interest you will pay to the credit card company. This is why it is better to pay as much of your balance as you can each billing cycle - it saves you money by reducing the amount of interest you pay. Also, depending on the terms of your credit card agreement, paying the minimum can actually make your principal balance increase. The minimum payment may not cover the amount of interest due.
What is Minimum Payment?
The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company.
Can merchants place a minimum amount on credit card purchases?
A merchant can & will require a minimum purchase amount in some cases. The credit card company charges the merchant for each transaction. If a purchase does not exceed the amount they are being charged from the cc company, they can decline to process your card. Most merchants have a sign explaining their policy.
Is there a minimum credit score to apply for an amex card?
You do not need a minimum credit score. You just need to be able to pay off the amount at the end of every month.
What is a balance transfer with regards to credit cards?
A balance transfer is when an amount owing on one credit card is transferred to another credit card. This is usually done to take advantage of lower interest charges. A credit card company usually specifies a minimum/maximum amount you can transfer.
Why is it unwise to pay minimum credit on your credit card?
Paying only the minimum due on your credit card balance maximizes the amount of interest you will pay to the credit card company. This is why it is better to pay as much of your balance as you can each billing cycle - it saves you money by reducing the amount of interest you pay. Also, depending on the terms of your credit card agreement, paying the minimum can actually make your principal balance increase. The minimum payment may not cover the amount of interest due.
What is Minimum Payment?
The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card company.
What amount to pay on credit card to keep finance charge in control?
minimum
What is the meaning of payment due date, minimum amount due, and last bill due in a credit card?
A payment due date is the day that a minimum payment is due on a credit card bill. The minimum amount due is the smallest amount of money that must be paid in order to avoid a late payment fee. The last bill due is the date of the previous month's credit card bill.
Can merchants place a minimum amount on credit card purchases?
A merchant can & will require a minimum purchase amount in some cases. The credit card company charges the merchant for each transaction. If a purchase does not exceed the amount they are being charged from the cc company, they can decline to process your card. Most merchants have a sign explaining their policy.
Is there a minimum credit score to apply for an amex card?
You do not need a minimum credit score. You just need to be able to pay off the amount at the end of every month.
What is a balance transfer with regards to credit cards?
A balance transfer is when an amount owing on one credit card is transferred to another credit card. This is usually done to take advantage of lower interest charges. A credit card company usually specifies a minimum/maximum amount you can transfer.
How does credit card minimum payment work?
One can pay the minimum balance, usually a fraction or percentage of the total amount owed. As long as you meet this minimum amount faithfully, the credit card company will absolutely love you to bits. You see, by paying the minimum, you are only filling the pockets of the corporation that issued the card - your balance, if pretty high, could take up to 20 years to pay off by just making the min payment. Best advice on CC's - pay the entire bill when it becomes due ... protect your good credit rating, and build better credit history, too.
Is paying the minimal on credit cards considered a sign of credit trouble?
Paying the minimum amount due on credit card is not necessarily a sign of credit trouble because it actually makes the credit card account current.
If your credit card balance is 1150 and the minimum monthly payment required is 3 percent What is the minimum amount you must pay this month?
34.50
What is the minimum amount that you should charge on a credit card?
each credit card is different. An example is that for a capitol one credit card the minimume for the card is 15 a month. Another example i know is that if you spend more than 429 at bestbuy on the bestbuy credit card you would have to divide the purchased amount by 18 and that is how much you would pay each month until the full amount is payed off.
What do secured credit cards mean?
A secured credit card is a credit card for people with poor credit ratings that must deposit the desired amount on money before using the card. The card is similar to a pre-paid credit card that allows credit ratings to get better.
