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Continue with my CC method or pay it off and leave it?

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Money Talk > Credit & Loans

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ParadisA330
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Continue with my CC method or pay it off and leave it?  Reply with quote  

Hi,
I am a 27 year old guy who recently got into credit card trouble. I moved 600 miles away from home and followed a friend's "good advice" to get a Credit Card with a $5,000 limit. Well, I got a little crazy being a first time credit card holder (I even read the horror stories and thought "I would never do that"). I went over that amount. I was playing catch up for months. In addition to that, I've gotten a $500 credit card. Between the Credit Card and car payments, I fell behind. I worked hard and was able to pay off both the Car and Credit Card within the last few months. Because of this, my credit score dropped. I recently moved again and was concerned I wouldn't get an apartment due to my low credit score, but happily that was the case. I am very happy in this apartment and plan to stay here for a few years now.

I have used the CC of the $500 limit to purchase items such as gas, and a few reoccurring payments on there (cable, cell phone etc). Once those payments are made, I instantly log into my account and pay (in full) the card from my checking account. Is this a good practice? Will my credit go up by "proving" that I can make payments? I've lost nearly $20,000 in debt over the last few years from paying off that card and car, but obviously the damage has been done! Is my practice good, or should I simply pay off the card and rely on my debit card. With interest (its a "Capital One rewards card"), am I in the end paying a higher price for these items, even though I am instantly moving my money from my checking to my credit card account?

Thanks!

Andre

P.S. if this goes in the "personal" section, please move it. ~Thanks!
Post Sun Sep 22, 2013 5:54 pm
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oldguy
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quote:
and followed a friend's "good advice" to get a Credit Card with a $5,000 limit.


It's sad that you blame a friend for your bad decision.

It doesn't help to quickly go on-line and pay for things that you just bought, that doesn't show up on your score.
I use a credit card for everything, seldom use cash anymore, even for very small purchases. I wait for the monthly bill, then pay it off in full - I don't borrow on the crediit card, I've done that for years and my score is in the 800's. It doesn'tcost anything, they don't charge interest as long as you pay by the due date.
Post Sun Sep 22, 2013 7:24 pm
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coaster
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Paying off your car loan and your credit card balance won't kill your credit score. By any chance did you close that account with the $5K limit when you had it paid off? That would have killed your score, big time. When you've got a year's history of paying off your balance faithfully each month on your active account, get the credit limit increased as much as they're willing to increase it, *but continue charging only as much as you can comfortably pay off each month*. That....will improve your credit score. And your credit usage habits, as well. Smile

~Tim~
Post Mon Sep 23, 2013 4:30 am
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Guppy2
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I am like the other posers that uses my CC but pays it off full every month. I have done it in the past 10years. Actually I just have my cc auto pay in full, never pay a penny of interest.

However if you don't have enough self control, or think you will over spend even for one month, I would recommend you to go with the debt card.

And yes don't close your cc, if even you don't want to use it, cut it and or put it away. It will hurt your score if you close it.
Post Mon Sep 23, 2013 2:10 pm
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littleroc02us
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Besides our mortgage which we paid one off last year, my wife and I use 1 credit card which I'm a joint user on and we use it to pay gas and an occasional airline ticket and then pay it off each month and our credit score is 815 and 780 respectively. I wouldn't get caught up in all of the credit card hoopla, simply pay your bills and pay cash for things as often as you can.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Sep 23, 2013 2:21 pm
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ParadisA330
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quote:
Originally posted by coaster
Paying off your car loan and your credit card balance won't kill your credit score. By any chance did you close that account with the $5K limit when you had it paid off? That would have killed your score, big time. When you've got a year's history of paying off your balance faithfully each month on your active account, get the credit limit increased as much as they're willing to increase it, *but continue charging only as much as you can comfortably pay off each month*. That....will improve your credit score. And your credit usage habits, as well. Smile


.....The CC company closed it for me. Rolling Eyes Crying or Very sad
Post Mon Oct 07, 2013 3:08 am
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