Should I pay my entire balance?

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nyc212
 
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Should I pay my entire balance?

Postby nyc212 » Wed Nov 12, 2014 3:02 pm

Hello everyone, this is my first post so please forgive me if I'm placing this thread in the wrong section.

Anyways a little about my short credit history. I am 19. I got my first credit card with Wells Fargo on my 18th birthday in August 2013 with a $1000 limit. Then in June 2014 I got the Amex Premier Rewards Gold charge card. Now I recently got a BarclayCard through Apple to finance the new iMac I just purchased. It was approved for $2,000 and it was 18 months no interest so all of the $2,000 was used and the rest of the purchase was paid with my Amex.

My concern is related to paying the whole balance vs part of the payment. Ever since I got the Wells Fargo I have been paying off the balance fully. I charge up to $700 sometimes (I am aware thats not good but I've began to cut back) but I always pay it off. But I've been reading that paying the whole balance is not necessarily the best thing to do. I'm not sure what my APR is on that card. Would it be weird that all of a sudden I am not paying the whole balance off as I was for the past 15 months? If I should have a balance, how much?, and how much should I pay off from a lets say $700 balance? The minimum payment is always listed as $25.00. I don't want to end up interest debt so that is the reason why I pay it off fully.

As for the Amex I charge up to couple of thousand but I have to pay that off every month since it's a charge card. The BarclayCard if I go by the payments my payment comes out to be roughly $112 per month for 18 months.

Should I continue to pay my whole balance on my Wells Fargo CC? Should I pay my entire BarclayCard balance as well? I am always on top of my payments. Never late with anything. Please let me know what you think. Thank you! Also on a side note, I've never checked my credit score or have seen my credit report. Should I? And where would be the best place to do so?

Thanks again and sorry for my questions being all over the place.


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Vattené
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Postby Vattené » Wed Nov 12, 2014 9:14 pm

Welcome to the forum! You are on a good track so far :)
nyc212 wrote:I charge up to $700 sometimes (I am aware thats not good but I've began to cut back) but I always pay it off.

First of all, why do you think this is not good? Is it just because $700 is more than you would like to be spending? Because, credit-wise, there is nothing wrong with this. If you are worried about utilization there are ways to manipulate this with your payments, but you have the card and the credit limit so you might as well use it!



nyc212 wrote:But I've been reading that paying the whole balance is not necessarily the best thing to do.

Where have you read this and why are they claiming this? I've never heard this, and I think you may be getting bad information. You should always always pay in full! You're just handing over the bank money if you don't - and those interest charges will build up fast. I can't think of any reason why this would be good for you.



nyc212 wrote:Would it be weird that all of a sudden I am not paying the whole balance off as I was for the past 15 months? If I should have a balance, how much?, and how much should I pay off from a lets say $700 balance? The minimum payment is always listed as $25.00. I don't want to end up interest debt so that is the reason why I pay it off fully.

Not only is it weird, Wells Fargo may take adverse action against you, especially if you charge up a lot and start making minimum or near-minimum payments. I'm not saying it will happen or even that it is necessary likely to happen, but know that this type of behavior could spook Wells Fargo. Seeing a young person with a short credit history carry a high balance after a consistent PIF history could flag you as a big risk. Banks have been known to "chase balances," and reduce your credit limit as soon as you pay off any debt.



nyc212 wrote:Should I continue to pay my whole balance on my Wells Fargo CC? Should I pay my entire BarclayCard balance as well? I am always on top of my payments. Never late with anything. Please let me know what you think.

I would strongly recommend you pay all credit card statements in full! Carrying a balance is an incredibly easy way to get yourself into serious trouble with credit card debt. The BarclayCard is a bit of an exception. It's purpose really isn't as a revolving credit card, but more as a tool to finance a large purchase. 0% interest is a great deal, but if you have the money laying around I would recommend paying it off too (or at least more than the minimum that will get it paid off in 18 months).



nyc212 wrote:Also on a side note, I've never checked my credit score or have seen my credit report. Should I? And where would be the best place to do so?

You should absolutely get your credit reports, and you should do it at AnnualCreditReport.com. You can get a free report every 12 months from each of the bureaus. Any other source is a very high risk of being a scam. Personally, I like to stager them and get one report every 4 months, putting the three bureaus on a rotation. I wouldn't worry about the score if I were you. Unless you are taking out a mortgage (or possibly a car loan) soon, I see absolutely no value in paying for a credit score. The score will be of no relevance and will change by the time you actually take out any debt, but knowing what is on your reports is important. Consider using CreditKarma - they provide a score based on their own model, not a true FICO, but it can still be useful in monitoring trends over time.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

takeshi
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Postby takeshi » Thu Nov 13, 2014 1:06 pm

nyc212 wrote:Should I pay my entire balance?

Why would you not? Why would you pay interest if you don't have to?

nyc212 wrote:I charge up to $700 sometimes (I am aware thats not good but I've began to cut back)

Why is that not good? It's neither here nor there in terms of credit scoring in and of itself. If you're charging up $700 and can't pay it off then that's probably not good from a sliding into debt standpoint. Increasing balances will increase utilization which will negatively affect your scores.

nyc212 wrote:But I've been reading that paying the whole balance is not necessarily the best thing to do.

I'm guessing that you're misinterpreting what you've read.

You don't want all of your cards to report 0 balances as you'll take hit for that.

However, having a balance report and carrying a balance are two entirely different things. You do not need to carry a balance to have a balance report. If you pay the balance in full after the date the account reports (statement date for most credit cards) then you still have a balance reporting.

In other words, if you get the bill and pay it in full by the due date then the balance already reported when the statement was cut. Paying by the due date does not cause the balance to report as 0.

nyc212 wrote:Also on a side note, I've never checked my credit score or have seen my credit report. Should I? And where would be the best place to do so?

YES. You should be routinely checking your reports for accuracy, identity theft, etc. Scores are your call. I get scores from Discover and FNBO but I don't obsess over the numbers. There are so many scoring models in use and creditors use different CRA's so fixating on the numbers seems kinda pointless to me and I choose to focus on the data in my reports. That said, many find it useful to have a number to refer to as an indicator of progress.

Define "best". Best in terms of what? Cheapest is to use the Annual Credit Report site. If you want to view soft pulls then you need to obtain reports directly from each of the CRA's. If you want to perform frequent pulls (monthly, daily, whatever) then a CMS might make more sense. Always specify what you mean by best as it's a very subjective word.



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