Credit Myths: Keep a balance on your credit card every month
This myth deserves a big LOL!! You never guess who started this myth hmmmm yep you guessed it, the banks!
Well of course they want you to keep a balance well duhhh that means they can keep making money off you every month that you have that balance. Remember that every penny on your credit balance gives them a percentage in interest that you have to pay. So don’t be fooled honey.
The best way to get your credit score climbing is to pay off your balance every month. If you are using your credit card to increase your score, use it for small purchases like that sneaky pack of doughnuts and hazelnut cake you catch on the way to work every Monday and Thursday (yeah that’s me) and end of the month you just pay it all off. This will show responsibility for the credit that has been entrusted to you.
The credit card companies will tell you that having this balance shows that you are using the credit card often which looks like a good thing however it can also be a sign that you are not able to pay your debts off regularly. Which one do you think seems better?
Pay it off or leave it on?
Sure, there is a massive difference between leaving a balance of £10 and having a balance of £100 the interest charged will be a lot less however that is still interest you don’t need to pay. Just make sure you pay it off monthly. I remember I had a credit card that had a balance of £300 for nearly a year!! I was working so I could have paid it off but I just stuck to the minimum payment…when I worked out how much interest I paid that year I was so shocked. That is interest that didn’t even reduce the £300 balance!!
So listen your number one goal is increase your credit right? So let’s go through what you can do and the options you can take.
If you have a credit card with a balance:
CREDIT TIP: when paying off your card, make 2 payments in the same billing cycle. This will not only work in your favour when it comes round to the creditors reporting you as a good payer backer (yeah I made it up) but also it can save you money on paying interest on the remaining balance. Keep An eye on your billing cycle keep up with your payments.
You can do it! Love Ya xx