Should we pay interest?

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lorkat89
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Should we pay interest?

Postby lorkat89 » Fri Jan 25, 2013 7:16 pm

Was talking to a friend the other day and we got to talking about how we use our credit cards. Me, I pay the balance off every month. My friend said they prefer to carry a balance. Saying you shouldn't pay the bill in full (just minimum or over, not all) because thats how the credit card companies make money. And if you don't pay the interest they don't get anything. This is the first I've heard of that as a reason for carrying a balance. Has anyone else heard this?
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432521
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Postby 432521 » Fri Jan 25, 2013 7:32 pm

never pay interest it is the dumbest thing you could ever do. It is not always the case that you would have to pay interest if you had a balance all you have to do is pay the bill before the closing date and you won't pay interest.
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cashback
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Postby cashback » Fri Jan 25, 2013 8:00 pm

Explain to your friend that credit card companies get swipe fees. They get a percentage from every swipe of the card. As 432521 said, it is stupid to pay interest. But if your friend likes giving money away, I take donations gladly.
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kcarter609
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Postby kcarter609 » Fri Jan 25, 2013 8:26 pm

That's because most people are completely retarded and under the assumption that if you don't ALWAYS carry a balance, it will show on your credit report that you don't use your revolving debt (TOTALLY NOT TRUE). They also think it improves your credit report by carrying a balance because it shows you can pay a balance over time (TOTALLY NOT TRUE).

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RewardHop
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Postby RewardHop » Fri Jan 25, 2013 10:23 pm

kcarter609 wrote:That's because most people are completely retarded and under the assumption that if you don't ALWAYS carry a balance, it will show on your credit report that you don't use your revolving debt (TOTALLY NOT TRUE). They also think it improves your credit report by carrying a balance because it shows you can pay a balance over time (TOTALLY NOT TRUE).


+10000000000000

Even if you pay your bill in full every month upon receiving your statement (or e-statement), your credit report will still show you as having a balance on the card.
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Postby Bksuper » Fri Jan 25, 2013 11:31 pm

cashback wrote:Explain to your friend that credit card companies get swipe fees. They get a percentage from every swipe of the card. As 432521 said, it is stupid to pay interest. But if your friend likes giving money away, I take donations gladly.

+1!!!
They make plenty from the swipe fees and interchange commissions, esp. for the signature visa/ World Mastercard/ Amex rates. Now when we ONLY use the card for the top tier reward category(ies) that have a higher rewards rate than they get on the swipe and interchange and still pay in full, then they lose money, but I think the big banks and their executives make adequate profits and get adequate (excessive) compensation. Not to mention the taxpayer bailouts.
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MemberSince99
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Postby MemberSince99 » Sat Jan 26, 2013 8:15 am

They must be on MyFico, right? "Oh we OWE it to the credit card companies to pay them 30% interest on our purchases so they can make money...."

Wow. Total disconnect from reality. First of all not true as everyone else has said (though clearly they make a lot more if you do pay interest). Secondly, take it from me, I've worked in corporate America for a lot of years now, and I can assure those of you who are worried, they care VERY MUCH about their bottom line. In fact, once you get to know them, you will learn they are almost obsessed with it. And they simply cannot and will not operate at a loss across the board for an extended period of time. So if you are very concerned that your poor credit card company is losing money and you need to be sure to throw a lot more their way, just believe me when I tell you they'll be glad but it really does NOTHING at all positive for you, and they'll still be in business tomorrow regardless.

I seriously can't believe people think this way. I mean come on get a clue. All they talk about is profit and loss and maximizing profits etc etc, I've sat in enough of those to know that. The funny thing is, once in a while the customer and his or her satisfaction comes up. HOWEVER every time without fail, that is considered ONLY in terms of how it affects business and revenue and profits coming in. So believe me folks, you do not have to lose sleep worrying that no one in these places is trying to squeeze every last penny they can out of you - they ARE.


DavidNY
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Postby DavidNY » Sat Jan 26, 2013 9:32 am

Never pay interest if you can avoid it.

FutureBillionaire
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Postby FutureBillionaire » Sat Jan 26, 2013 10:22 am

I don't pay interest. As a matter of fact, I do my best to pay my balance BEFORE my statement cuts. When applying for credit, you want to have a small percentage of your cards reporting a balance. I only pay after the statement cuts if my cash flow is lower than normal.
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Postby silver6054 » Sat Jan 26, 2013 5:38 pm

kcarter609 wrote:That's because most people are completely retarded and under the assumption that if you don't ALWAYS carry a balance, it will show on your credit report that you don't use your revolving debt (TOTALLY NOT TRUE). They also think it improves your credit report by carrying a balance because it shows you can pay a balance over time (TOTALLY NOT TRUE).


Actually, most people (however retarded) don't think about credit reports at all! As the OP says, the friends thought that this is what the individual credit card company wants (and they of course know your spend and pay history).

Of course, I don't disagree with any of the conclusions (DON'T pay interest) but to assume that belief is grounded on impact on credit reports seems to overestimate how much that concept has reached the general public.



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