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Robert Riley

Credit Card

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Hey guys,

So I got my first credit card, and the first payment is due. Now I have 0% APR until July next year when it goes up to 11%. So in respect to the oh-so-mysterious credit score, what's my best payment option? Should I pay the minimum since there is no interest for now? 

I am also in between jobs as I just graduated, so now is a convenient time to have to just pay the minimum. 

-Rob

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Your credit score although important these days is not nearly as important as keeping your card balance at ZERO for as long as Humanly Possible. "Paying the minimum" is how Banks keep the light on. 

At this stage in your life, use the card as a tool to establish good credit.  Not a way to purchase unnecessary items you can't afford.

Perhaps use the card to purchase what you would normally buy (and can afford) and then pay the balance monthly.

Whoever gave you the card is betting that you will not be able to resist the urge to build up that balance and make them money. 

Good Luck

A-Jay

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I 100% agree with AJay. Pay it off every month. Use it to buy gas and food you normally would but never spend more than you can pay off each month. 

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Divide the balance by the number of months remaining on your zero offer.  Pay that much every month.  Arrive at July 17 with $0.00. 

Your idea of paying the minimum because there's no interest is decent logic.   IF you can still manage to have it ALL paid off before the interest rate jumps.

Not a lot of people have that sort of discipline, however.  A-Jay's suggestion is best for most.  A great plan for most of us:  Use the card for every day expenses -- especially if you're getting points or some sort of reward, but pay it off each month.

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I divide the amount financed by one fewer months than the term if  I use no interest financing for large purchses. Otherwise, pay the whole balance every month.

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agree completely with paying the full balance every month.  if you're really using this build credit, then simply make your necessary purchases (that you have the money for) and then turn around and pay that off, in full.  debt mounts quickly and only gets harder to pay off.

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Pay your balance in full each month.  The "I'll pay it later" train of thought is what gets people in trouble.

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Unless I make a " interest free monthly payments " purchase I pay it off down to the last cent every month, not owing is as important as owing and paying on time.

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If you are presently not too worried about maintaining the highest credit score possible divide balance into equal payments calculated up to the month interest will be applied for a balance of $0. Otherwise pay balance off monthly.

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If you can not pay your credit card bill off every month, you are living above your means.  In my opinion you are broke.  Please do not fall into the 0% interest rate for a certain time trap.  You will reach July and have a balance you can not pay off.  Also, make sure there is no special retroactive interest rate clause somewhere in the micro print that if you have a balance in July, you have to pay back interest.  May sound crazy but credit card companies are tricky that way.

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So if you borrow money to buy a home or a automobile you need to pay it off at the end of the month or your living above your means?

Credit is credit. Some lenders are better than others but borrowing money is part of life. Doesn't mean anything unless you borrow more than your financially capable of paying back. Or your immature and do not pay your debts in a agreed to manner. 

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On 8/9/2016 at 9:26 PM, Robert Riley said:

So I got my first credit card, and the first payment is due. Now I have 0% APR until July next year when it goes up to 11%. So in respect to the oh-so-mysterious credit score, what's my best payment option? Should I pay the minimum since there is no interest for now? 

 

I strongly agree with the others who say pay it off monthly.  That will build your score plenty.

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More importantly, paying it off monthly will build fiscal discipline which is tough to do.  

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Pay it off.

Keep it at a zero balance as soon as you can.

When me or my wife uses a credit card I try to pay it off via my banking bill pay services as soon as I can, if not later that day when we get home.

 

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Paying the full amount every month is the best advice but, depending on the amount and your financial situation, it's not always possible. Whichever you choose, the MOST important part is to pay on time.  Late payments knock down your credit score faster than anything. 

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In regards to your credit score you want to have high available credit, meaning less than 20% used and no missed payments.  Over time, that will increase your credit score.  I would also just pay it off each month but honestly, unless you are getting rewards, there is no reason to use a credit card other than slight differences in protection should their be fraud.  Your credit report/score doesn't know that you charged items and then paid them off, it just knows what the balance is at the time of reporting and if your payment was made on time.

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23 hours ago, S. Sass said:

So if you borrow money to buy a home or a automobile you need to pay it off at the end of the month or your living above your means?

Credit is credit. Some lenders are better than others but borrowing money is part of life. Doesn't mean anything unless you borrow more than your financially capable of paying back. Or your immature and do not pay your debts in a agreed to manner. 

Regarding the OP's situation of being in a position where it is a "convenient time to have to just pay the minimum" on his credit card,  yes he is living above his means.

I understand the idea (I may not agree with it) of if you do not borrow money you are never going to have anything, but if you are paying on a house or an automobile and you can only pay the minimum on your credit card (which is most likely used for everyday necessities) then yes, you are living above your means.  

I think it is sad for Americans that "borrowing money is part of life."  The old saying by the old timers around here is if you want to know who really owns your land is stop paying your taxes.  With a majority of the people now I think you can include stop paying the bank in that statement.

I believe in my heart that when the OP gets his credit card bill, he should pay the current balance in full.

 

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I was told that the best way to build credit is to use 50%-75% of your max limit and pay it off in full monthly.

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6 minutes ago, bigfruits said:

I was told that the best way to build credit is to use 50%-75% of your max limit and pay it off in full monthly.

I'm afraid it is a LOT more complicated than that.  The formulas and algorithms used are dependent on a lot of variables.  Some individuals can be penalized for having low balances with relatively high limit(s), also. 

As someone above pointed out, the single most important and consistent variable to your credit rating (that you can 'easily' control) is to not be late with payments or bounce checks (or whatever today's check-less equivalent is.)

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Is there a time frame at which you'd need a better credit score? Do you need to put a lot of purchases on the card-(low cash flow)?

If not, I'd advise you to use the card only for gas and groceries and pay it off in full every month. Don't use it for discretionary purchases, like Dunkin Donuts, going out to eat, fishing equipment, etc. Those are the purchases that will get away from you if you aren't disciplined. Your credit score will go up and you will have the card working for you-not the other way around.

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3 hours ago, PourMyOwn said:

Is there a time frame at which you'd need a better credit score? Do you need to put a lot of purchases on the card-(low cash flow)?

If not, I'd advise you to use the card only for gas and groceries and pay it off in full every month. Don't use it for discretionary purchases, like Dunkin Donuts, going out to eat, fishing equipment, etc. Those are the purchases that will get away from you if you aren't disciplined. Your credit score will go up and you will have the card working for you-not the other way around.

Wait -- Dunkin Donuts is discretionary???

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35 minutes ago, Chris at Tech said:

Wait -- Dunkin Donuts is discretionary???

Not in my world ~

:D

A-Jay (Runs on Dunkin)

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5 hours ago, A-Jay said:

Not in my world ~

:D

A-Jay (Runs on Dunkin)

Coffee is not an option, it's a way of life

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Thanks guys. 
It's a USAA card, according to the statement from my app, there is no back-interest, and I do not have to pay interest on my pre-existing balance as of next July. 

My goal is to build my credit somewhat quickly. I'd like to get a down payment on a truck next January (2018). 

About "living beyond my means,"  I was unexpectedly fired from my job, so my income is pretty small right now. When you have no income, everything is "living beyond your means."

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