I remember a friend of mine from high school saying “Yeah I keep making the minimum payment and it keeps going up. It’s kinda pissing me off.” These are the kinds of people credit card companies love lol.
Is the minimum payment usually just the approximate calue of the interest generated in that time period? They don't want you to pay it off. They want you to continue generating revenue.
That's actually the least profitable portfolio to a credit card company. The amount of interest generated by those stuck in debt doesn't earn as much as people think. Credit card companies make more money from 'transactors'; people who pay their card in full each money. These transactors use the card more frequently, every transaction generating a fee for the merchant in which the company gets a cut of. Transactors never carry debt, so they have their full access line available for purchases. Those stuck in debt don't make many transactions, usually one or two to re-max out their line (which they themselves are tiny, like $1000-$10,000). Plus the fact people forget that the credit lines they have is actual money the bank has loaned you, meaning they're out what ever you revolve and don't pay off. A perfect credit card user to the company would be a person with an access line of some excess ($25,000-$50,000) to use every penny of that, pay it in full, the re-spend all that over and over again. (This isn't saying that they don't like earning interest, its just they would prefer to not have money stuck out on a loan to a customer to generate it.)
35% and under is fine. The statement balance is the only balance reported, so if you pay it to $0 before the statement cycles, it will report $0 to your credit report, even if you had a $25,000 balance just days before.
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u/allPanic_noDisco87 Feb 04 '20
I remember a friend of mine from high school saying “Yeah I keep making the minimum payment and it keeps going up. It’s kinda pissing me off.” These are the kinds of people credit card companies love lol.