What is the best way to pay off credit card?

Question

Account Closed · Answer

If the interest on the cc is high and you can afford it off, just pay it all off. You will have less in your pocket but it will probably feel good knowing that you are done with it.

Daren H. · Answer

@Tri Nguyen In your basic example I would say paying off the credit card in full each month is best, assuming you would be paying interest on the balance by stretching payments over 5 months. In my mind, by paying off the balance in full, you pay $0 in interest. However, you still have access to $1000 should something come up and you need the money.

The situation could be totally different if I took some sort of 12 month, zero interest, no fee cash advance on my credit card to help flip a house over a short term. I would carry a balance for as long as it took me to sell the house. I might even carry the balance after selling the house depending on what else I have in the pipeline and if I was sure I could pay back the credit card in full before 12 months.

I guess what I am saying is it really depends.

Ray Fisher · Answer

A paid off card decreases your debt to income ratio witch in turn increases your credit availability. Any balance over 50% of available credit decreases available credit rating. (credit score)

A loan paid off early is a loan paid off early that increases credit rating. pay late decreases credit ratings.

Cash sales create no credit report or show no credit worthiness. It is the best way to pay no interest. but no credit history is worse than bad credit in some cases.

If your trying to increase credit worthiness make payments but pay off early.

If your trying to reduce debt to reduce debt to income ratio make lump pmt.

It all depends on what your trying to achieve.

Cheryl Packham · Answer

It greatly depends on what your strategy is. Can you use that 800 you didn't use to pay your credit card to make more interest than you are paying? I am assuming here that this question is not as simple as it appears.

However in case that is a bad assumption and you truly are asking if it is better to pay off a credit card balance each month or pay it over 5 months I will provide that explanation. Paying $200 per month for 5 months on an interest collecting credit card will not actually result in a paid in full balance. A 1000 balance on a credit card with (for example purposes) 13% interest APR, paying 200 per month will result in an additional 33.80 extra to be paid in interest over that 5 month period. This means that if you pay $200 per month for five months you will still have $33.80 to pay in month six. For a total amount paid of $1033.80.

JD Martin · Answer

From a purely financial point of view, if you are paying interest you would pay it in full each month. Interest paid is money spent. But there may be opportunity that the interest affords in excess of the interest paid, so its impossible to answer this with 100% certainty.

Richard Dunlop · Answer

I think you are asking for your credit record or FICO score?

It makes no difference your score is only a snapshot of your current situation and only is affected by a payment made more than 30 days late. It is not affected by how much you paid in the past as long as you made the required payment on time each month.

What is the best way to pay off credit card?

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