Does maintaining a balance affect your credit score?

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DGenerateKane
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Does maintaining a balance affect your credit score?

Postby DGenerateKane » Wed Jan 21, 2009 3:58 pm

I applied for a new card last week and it (like most cards) has 0% apr for a certain amount of months. I was planning on just paying the minimum during those months so I can earn more interest on the money that would have normally been used to pay off the card. If it does affect my score than I won't do it.


Extreme z28
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Postby Extreme z28 » Wed Jan 21, 2009 5:49 pm

It can. They take the total credit of your cards and then they take how much you owe on your cards. If your total debt is less than 15% of your total credit it won't affect your score but if it's more than 15% it will likely lower it and if it's over 30% it will almost definitely lower your score.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Wed Jan 21, 2009 7:53 pm

Extreme is right. Be sure to keep your balance on that card below 30% of the credit limit and probably no more than 15% of all of your available credit available on your cards.

Making the minimum payment only for a while shouldn't be a problem as long as the debt isn't going up during that time. In other words, don't make any purchases on your balance transfer credit cards. That way every payment you makes decreases the balance and doesn't increase it. If you pay the minimum payment and your balance consistently increases then the creditor can view that as a negative.
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DGenerateKane
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Postby DGenerateKane » Wed Jan 21, 2009 10:40 pm

Keeping it that low won't be a problem, and I've never had a balance before.

1bootcamp
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Postby 1bootcamp » Thu Jan 22, 2009 1:15 am

Be careful. I did the same thing last year. I've invested for many years and I thought it was smart to do a 0% balance transfer even though I could pay it off. I thought with my money in the market appreciating I would be the smart one coming out ahead. I also thought I could pull that money out anytime and pay off the balance ten times over if I wanted.

Boy was I wrong. Over the course of a few days the market tanked and when you're on margin it's like doubling down. Your gains are doubled and your losses are doubled. Then take that two of the stocks went bankrupt in the same month, one of them being a multi-billion dollar company with a 50 year track record of strong profits.

If you're keeping your money in an FDIC insured savings account you are okay. If you plan on putting it anywhere else I wouldn't do it.

DGenerateKane
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Postby DGenerateKane » Thu Jan 22, 2009 3:41 pm

It's in a FDIC insured checking account, it has a 3% higher interst rate than my savings account.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Thu Jan 22, 2009 11:29 pm

DGenerateKane wrote:It's in a FDIC insured checking account, it has a 3% higher interst rate than my savings account.


Good rate! Who's offering that kind of interest rate on checking? An online bank? Maybe I need to switch.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred

DGenerateKane
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Postby DGenerateKane » Fri Jan 23, 2009 5:54 pm

Oregon Community Credit Union, I doubt they have any branches outside Oregon. :p

sputNick
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Postby sputNick » Fri Jan 23, 2009 6:48 pm

Credit unions always have better interest rates. I use to be with Standard Federal which was a big bank around the Great Lakes but got sick of all the fees and switched to a CU. They are much better than any bank. They pay higher interest on savings and charge lower interest on loans.



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