Is It Bad To Carry a Balance On Your Credit Card?

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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creditcardguy
 
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Is It Bad To Carry a Balance On Your Credit Card?

Postby creditcardguy » Thu Nov 14, 2013 7:23 am

Hey I had a question regarding a temporary 0% intro APR offer that came on a credit card of mine.

I have this rate for another 7 months or so. Will it hurt my credit score to put, say, $3000 on the card and carry the balance over the 7 months while I pay it off?


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jumbo
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Postby jumbo » Thu Nov 14, 2013 11:57 am

Are you planning to apply for a credit in near future? If Not, you should not worry about carrying a balance on 0% APR card, as long as you pay the card in time.
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Postby FutureBillionaire » Thu Nov 14, 2013 3:06 pm

creditcardguy wrote:Hey I had a question regarding a temporary 0% intro APR offer that came on a credit card of mine.

I have this rate for another 7 months or so. Will it hurt my credit score to put, say, $3000 on the card and carry the balance over the 7 months while I pay it off?


I agree with the other answer that's been posted. Also, it's bad if you're carrying it because youc an't afford to pay it off. It's important to only charge what you can afford to pay off so you don't build yourself a pile of high interest debt. I'm speaking from experience.
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Postby takeshi » Fri Nov 15, 2013 8:11 am

creditcardguy wrote:Will it hurt my credit score to put, say, $3000 on the card and carry the balance over the 7 months while I pay it off?

Impossible to say without knowing the credit limit. Your score is affected in part by utilization. What utilization (for the card and overall) would $3,000 put you at? $3K would max one of my cards while it would only be 10% on another card.

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Postby MemberSince99 » Sat Nov 16, 2013 7:08 pm

FutureBillionaire wrote:I agree with the other answer that's been posted. Also, it's bad if you're carrying it because youc an't afford to pay it off. It's important to only charge what you can afford to pay off so you don't build yourself a pile of high interest debt. I'm speaking from experience.


This is exactly right. While it may or may not hurt your score, it's still not a good idea. Think about why they are letting you carry a balance for a while at 0%. Is it because they are nice guys trying to save you money? NO. It's because they hope you'll make a habit out of this practice and end up paying them a LOT of interest. They make a lot of money off that part of human nature that gets complacent about things like this until you find yourself paying a lot of interest or worse are in over your head.

That's why I never carry a balance, even though a lot of my cards have had 0% for X months (and the Duck card does right now), because I don't care to start thinking that's a good thing to do.

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Postby GoCreditGo! » Thu Nov 21, 2013 9:34 pm

What's the "Duck Card"? Is it related to Duck Dynasty?

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Postby Obi-dan » Thu Nov 21, 2013 10:26 pm

It is branded by the University of Oregon. It currently offers 0% on purchases.
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Postby woogs » Sat Dec 07, 2013 8:47 am

MemberSince99 wrote:This is exactly right. While it may or may not hurt your score, it's still not a good idea. Think about why they are letting you carry a balance for a while at 0%. Is it because they are nice guys trying to save you money? NO. It's because they hope you'll make a habit out of this practice and end up paying them a LOT of interest. They make a lot of money off that part of human nature that gets complacent about things like this until you find yourself paying a lot of interest or worse are in over your head.

That's why I never carry a balance, even though a lot of my cards have had 0% for X months (and the Duck card does right now), because I don't care to start thinking that's a good thing to do.


While I agree that is why the banks offer 0%, to collect a lot of interest once the promo ends, I disagree on not taking advantage of the 0% offer - especially if you are already carrying a balance at a higher rate.

First off as others have said, it all comes down to utilization. If your limit is $4k and you are carrying a $3k balance then yes that looks bad and will drop your credit score probably by about 20-30 points.

However, your credit score uses all of your cards limits and combines them. A single bank may not extend more credit to you if you have their card maxed out, but if you have cards from say Amex, Chase, Citi, and Barclays all with $4k limits and you have a $3k balance transfer on one card and the others not being used (3k / 16k) it will not impact your score.

As for taking advantage of the offer, only you can decide if you have the self control to keep it under control and make sure it is paid off in time.

I take $20k balance transfers from Barclays occasionally - they usually come with a minimum of 12 months 0% with only a 1% transaction fee. $200 (the 1% transfer fee) is "cheap" to borrow $20k interest free for a year but I make sure I have a plan in place to pay it off in full before the promo ends. I am not using their "free" money for stock investing, but I usually can find something to use their "free" money on for a year.

As for credit score, my limits are above $200k across my cards and my score does not change at all if I put a $20k balance transfer on a card. The utilization is very small when factoring in all of my cards.

If you have the self control, why not take advantage of the bank? They do the exact same thing to you and want to take advantage of your situation so I take advantage of their offer. The key is self control and making sure you can pay it back in time!
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Postby MemberSince99 » Sat Dec 07, 2013 1:13 pm

Because nothing, other than death and taxes which both suck by the way, is guaranteed in life.


What if I lose my job? I may fully intend to pay them back, but what if due to no fault of my own (not that anyone cares whose fault it is trust me on this I've been here they only care about getting PAID) I CAN'T pay it back? What if I have massive health issues all of a sudden, a heart attack, cancer, I get hit by an uninsured drunk, that's not my fault but again who gives a rat's rear end they just want their money.


Sorry but I'm just not into taking gambles I don't need to take. If you guys are wealthy and it's nothing to you just play money by all means, ride the bank, that makes sense, but I work for a living I'm not rich and never will be (nor do I honestly WANT to be) and I prefer not to play with fire that I might end up getting burned with. Been there, done that, didn't like how that turned out. But if your circumstances are different by all means go for it. I still will point out to people that assuming the best will always happen can backfire on you and it's best to hope for the best but be prepared for the worst.



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