You know, like “always split on 18,” or “having kids is the most rewarding thing you can do in life.”

What’s that one bit of advice you got from a trusted friend that you know deep, deep down would just ruin your thing?

  • bitwyze@lemmy.world
    5·
    9 months ago

    I’m confused - you pay off almost all of your credit card and you’re “spending even more money in the long run”. Why not just pay off all of it? Surely if you were able to afford your bills with cash, you’d be able to pay off your credit card in full every month since the bills would be the same?

    • cobysev@lemmy.worldEnglish
      62·
      9 months ago

      If you want good credit, you don’t pay it all off. You need recurring payments over time. If I pay it all off at once, then my credit score doesn’t go up much at all. But if there’s a constant debt on my card and I’m never late in paying at least the minimum required each month, then my credit score skyrockets quickly.

      This is why the system is garbage. You need to spend more money to show you’re excellent at managing money. It’s a dumb system that makes no sense.

      I pay almost everything off because it minimizes the interest I have to pay while keeping a line of credit running on the card. But it’s important to keep that line of credit active, or else your credit score stagnates.

      • bitwyze@lemmy.world
        8·
        9 months ago

        Isn’t that just not true?

        https://www.capitalone.com/learn-grow/money-management/credit-myths/

        Myth No. 5:  You have to carry a credit card balance to build credit

        If you don’t pay your credit card balance in full, it’s carried over to the next billing cycle and considered a revolving balance. And that unpaid balance might accrue interest.

        You don’t need to carry a balance to build credit. According to the CFPB, “Paying off your credit cards in full every month is the best way to improve a credit score or maintain a good one.”

        Fact No. 5: You don’t have to carry a credit card balance to build credit

        While carrying a balance isn’t necessary to build credit, a healthy credit utilization ratio—which measures how much available credit a person is using—is an important part of credit.

        In addition to paying off credit card balances in full every month, the CFPB recommends keeping a credit utilization rate of less than 30% of your available credit. That can be a way to show you’re responsible with credit.

        I pay my credit cards in full every month and accrue zero interest and have excellent credit…

      • BirdObserver@lemmy.world
        4·
        9 months ago

        I’ve got a high credit score and I’ve never not paid it off in full. It’s only really ever went up over the years, with the occasional tiny 1-3 digit drop. I’d never pay interest I don’t need to in exchange for a higher rating; they’ve got enough money.

    • hightrix@lemmy.world
      12·
      8 months ago

      Only pay off what is due, not the full balance. So if I spent 100 on my cc last month and then 100 this month. My bill is for 100, but my balance is 200. Pay the 100, incur no interest.

      Edit: by “what is due” I mean the full balance from the previous month, not the minimum payment.