June 21st, 2012
Should You Pay Off Your Credit Card in Full Every Month?
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In this Credit Karma FAQ video, Bethy and Ezra tackle one of the most popular questions in the Credit Advice Center: Is it better to pay off a credit card every month or make payments toward the balance every month? Do you know the answer? Watch the video to see our take!
Some people think that keeping a balance on your credit card from month to month will help your credit score… but it won’t. You’ll just end up paying more interest. You don’t need a balance at the end of the month to improve your credit health.
According to Credit Karma’s latest data, the average consumer has about $1,000 of debt per credit card. At the average APR of around 15%, you’re looking at about $150 per year… just in interest! Paying off your credit cards on time will build a positive credit history and paying them in full will save you money.
Remember… the important thing is having a card in good standing. And making a few purchases a month will keep it active and help you build credit. But you don’t need to carry a balance to do that.
Since the main purpose of good credit is to save you money, if you’re spending to improve your credit health, it’s just counterproductive. So avoid carrying a balance and you can have all the benefits of having a credit card without ever having to pay interest.
Check out our other FAQ videos: