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Not paying off entire balance
Posted on 1/30/20 at 10:58 am
Posted on 1/30/20 at 10:58 am
How big of a problem does not paying off entire credit card statement balance cause? I've always paid off the entire balance each month for the past 10 years but may be looking at having to make a smaller payment this month due to a bunch of unforseen crap -- how awful of an idea would this be
10
Posted on 1/30/20 at 11:00 am to lesgeaux
A big problem as far as I’m concerned. Interest starts accumulating as soon as you purchase something. There is no grace period or free use of their money. The only way to stop this is to bring the balance to zero.
This post was edited on 1/30/20 at 11:05 am
Posted on 1/30/20 at 11:02 am to lesgeaux
quote:
How big of a problem does not paying off entire credit card statement balance cause?
It increases your credit card utilization (a factor in your credit score) and causes you to incur finance charges that can range from very little to quite a bit depending on the APR on your card.
I may impact your LTI ratio if you are applying for new credit.
Other than those 3 factors, I'm not sure of any other impact.
Practically - if you're going to catch up next month? Probably no big deal.
If this is going to be a 6-month or longer (and assuming your APR is quite high), I might consider going to bank or credit union and getting more conventional financing to avoid falling into the consumer credit trap.
If you do that, however, I would recommend suspending use of the card until you're back to zero - otherwise, you're in a mini (or bigger) debt death spiral.
Posted on 1/30/20 at 11:04 am to lesgeaux
How is your emergency fund? Can that get you through?
That is what it is there for.
And if you don't have one, add it to your mid-term/long-term plan to recover from this crisis. Used to be $1000, but frankly, I think $2500 to $3000 is probably more realistic. That won't necessarily get you through a new roof, but it will get most cars back on the road and the A/C working again - I'm not saying those are the only emergencies, but that's a good rule of thumb.
That is what it is there for.
And if you don't have one, add it to your mid-term/long-term plan to recover from this crisis. Used to be $1000, but frankly, I think $2500 to $3000 is probably more realistic. That won't necessarily get you through a new roof, but it will get most cars back on the road and the A/C working again - I'm not saying those are the only emergencies, but that's a good rule of thumb.
Posted on 1/30/20 at 11:06 am to lesgeaux
Would you carry over a balance for only one month and then pay off the balance or are you looking at not paying off the balance for multiple months?
Posted on 1/30/20 at 2:07 pm to LSURussian
Just one month
Posted on 1/30/20 at 2:09 pm to lesgeaux
quote:Then you're fine. Hakuna matata!
Just one month
This post was edited on 1/30/20 at 2:13 pm
Posted on 1/30/20 at 2:10 pm to lesgeaux
quote:
Just one month
No big deal.
Posted on 1/30/20 at 4:15 pm to lesgeaux
The vast majority of card holders carry balances for years , the card companies would not be able to stay in business if everyone paid in full every month. If you can honestly keep to only one month for a unusual event then I don’t see it as a if deal, but as others said it would be better to have and use a cash emergency fund.
Posted on 1/30/20 at 4:25 pm to lesgeaux
If you're worried about your credit score don't be. Utilization has no memory. As soon as it goes back down your score will go up the next month to where it was.
Posted on 1/31/20 at 10:29 am to lesgeaux
Something I didn't know the first time I missed a payment:
If you do not pay the entire statement balance, you will immediately begin accruing interest on the entire remaining balance. The only way to get back to zero interest owed is to pay the entire current balance to zero dollars.
If you do not pay the entire statement balance, you will immediately begin accruing interest on the entire remaining balance. The only way to get back to zero interest owed is to pay the entire current balance to zero dollars.
Posted on 1/31/20 at 11:06 am to lesgeaux
It's not a problem at all unless it becomes a regular monthly issue.
Posted on 1/31/20 at 2:59 pm to CajunTiger92
quote:
Interest starts accumulating as soon as you purchase something.
I don't think that's true for all major credit cards. I don't think you pay anything in interest if paid in full before the statement date. And after that you pay interest on the daily average from the statement balance.
Posted on 1/31/20 at 3:18 pm to Ace Midnight
bullshite. I have had a rolling balance on a card for years and my score is in the 800's.
Posted on 1/31/20 at 3:31 pm to lesgeaux
Learn the difference between
- Statement date and
- Due Date
Past the former, utilization is affected. Past the latter, interest becomes a factor.
- Statement date and
- Due Date
Past the former, utilization is affected. Past the latter, interest becomes a factor.
Posted on 1/31/20 at 7:46 pm to lesgeaux
If it is only month, you may be able to get the finance charge waived. You will stay have to pay interest but the charge for carrying a balance(usually $25ish) can be waived.
Posted on 1/31/20 at 8:47 pm to deeprig9
quote:
bullshite. I have had a rolling balance on a card for years and my score is in the 800's.
Your credit score will be fine for the most part as long you're paying something every month, but you're just paying interest by constantly holding a balance..
Unless absolutely necessary, pay off every statement balance in full and don't give away money.
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