7/26/2023 0 Comments Bills to pay every monthUp until the time cardholders actually pay the bill, credit card users can still earn interest on the money owed. This value comes from the concept that there is value in simply holding a sum of money over time, based on its potential to earn. Of course, the bill total will stay the same throughout a billing period, but cardholders can benefit from the “time value of money” extended to the amount owed. Instead, late-cycle-payers can likely afford to take full advantage of the credit extended to them each month. These routinely-responsible cardholders don’t benefit much from rushing to pay off monthly bills. People who do these two things reliably are more likely to have a favorable credit score. ![]() Many Americans do pay off bills in full and many keep monthly spending well below the recommended credit utilization threshold of 30%. ![]() Luckily, any credit card user, no matter their credit score or level of debt, can still adjust the timing of payments to help a financial situation. Even for responsible people, “Rule #1” can devolve into simply meeting a mandatory minimum to avoid penalty fees. adult with a credit card carries an ongoing balance of over $5,500. As such, the first step in timing payments should be simply ensuring that bills stay small enough to be paid reliably.Įnsuring bills remain reasonable is easier said than done and the numbers prove it- the average U.S. With interest rates commonly exceeding 15%, credit cards are an inefficient way to borrow money for longer than a month or two. ![]() The only real benefit is the capital that’s been temporarily extended to the cardholder. Paying what’s owed and being consistent about it are two of the most important factors on a favorable credit report.Ĭarrying a balance from month to month is often costly. Contrary to an enduring myth, carrying credit card debt past the end of the billing period is not good for credit scores-it’s usually the opposite. Before proceeding any further, there is actually one simple answer that’s true for all credit card users, no matter the circumstance: Pay in full, on time.
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