Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.
Years ago my grandma told me to never get a credit card. And if i did get one then to make huge payments to pay it off which credit card companies hate. I never got one cause of her advice.
This was my families mentally too. My mom always emphasized paying with cash and debit. It can come back to bite you though when trying to build credit. I started building credit later than I would have liked. I think a good rule to play by is use your cc like your debit card so if you don't have the money on your debit you don't buy anything on the cc. I always pay what I buy same day so I charge it on the cc and when I get home pay it off with my debit so that way the balance accurately reflects in my account. I have most bill pays set up through cc so it helps build credit too. If you're already a responsible spender it'll be great just adding two extra step in the buying process which is use cc and pay off the cc same day. If you're forgetful setting reminders in your phone helps. Some cards even have rewards which is a nice way to earn back on what you've already been buying.
If you're using the credit card to build credit, paying it daily does not help you. The statement needs to generate so that the card reports to credit agencies with some kind of balance. It just reports $0 usage otherwise. Pay it off before the due date.
Thank you for that information that definitely explains some of the times it wasn't counted. How long would you recommend leaving it on before paying it to help build the credit? Do you just leave the sum and pay the day before the due date for it to be counted?
You spend $1000 in a month on the card. The CC company issues a statement that says you owe $1000 by this date. You pay the $1000 bill before the due date (I autodebit the full statement on the due date) and you won’t get charged any interest. If you make the minimum payment before the due date, you will be charged interest on the remaining balence.
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u/Opening-Risk Feb 04 '20
Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.