Best way to use my credit?

[megsoro]

So after getting conflicting advise from family, I'm gonna ask you guys for some "outsider" advise. I have four lines of credit. Three student credit cards (Range in APRs from 15-26%) with limits of 150, 300, and 500. I also have a paypal smart connect account (APR is 26%) with a limit of 300.

I have $270 on paypal, with a min. payment of $35 each month.
I have $0 on the $300 credit card, no balance, no payment.
I have $75 on the $150 credit card with a min. payment of $25 each month.
I have $480 on the $500 credit card with a min. payment of $35 each month.

I tend to use the $150 card for gas, and try to pay it off completely every month, but that doesn't always happen. The $480 is from a vet bill, and that is the hardest one to pay off. (Payment is $35, but interest and "account protection fee" (can't get this removed, tried) take away a $20 chunk of that each month. The $270 is I admit, from frivolous purchases, and I have sworn off spending it, until it's all paid off.

Here's my problem- I've been told bringing down all these cards to zero will be worse to my credit then making minimum payments each month?! How is this possible?
Should I just try to keep $50 or so on each card at all times? Is paying off the $150 card every month wrong/bad?

I'm so lost. One parent tells me one thing, the other another.

 

[Marionnette]

So after getting conflicting advise from family, I'm gonna ask you guys for some "outsider" advise. I have four lines of credit. Three student credit cards (Range in APRs from 15-26%) with limits of 150, 300, and 500. I also have a paypal smart connect account (APR is 26%) with a limit of 300.

I have $270 on paypal, with a min. payment of $35 each month.
I have $0 on the $300 credit card, no balance, no payment.
I have $75 on the $150 credit card with a min. payment of $25 each month.
I have $480 on the $500 credit card with a min. payment of $35 each month.

I tend to use the $150 card for gas, and try to pay it off completely every month, but that doesn't always happen. The $480 is from a vet bill, and that is the hardest one to pay off. (Payment is $35, but interest and "account protection fee" (can't get this removed, tried) take away a $20 chunk of that each month. The $270 is I admit, from frivolous purchases, and I have sworn off spending it, until it's all paid off.

Here's my problem- I've been told bringing down all these cards to zero will be worse to my credit then making minimum payments each month?! How is this possible?
Should I just try to keep $50 or so on each card at all times? Is paying off the $150 card every month wrong/bad?

I'm so lost. One parent tells me one thing, the other another.

Whoever told you that is wrong! Paying off your cards is never bad for your credit! OTOH, leaving a balance on your cards forces you to pay interest every month. What kind of financial sense does that make?

 

[*Flower*]

IMHO, paying off your debts would be better. You can always pull them out once every few months (AFTER they're paid off) and charge a bit on them. BUT, that bit should be paid off immediately upon receiving the statements.

I have credit cards that I haven't used in years- but I don't cancel them. I wait for the issuing agency to do that. But charging a small amount establishes your payment history, and that will help you out later.

However, I'm sure that another poster will have another opinion.

Good luck!!

 

[slamzim]

Best thing you can do is to pay them off! You do not want to pay interest....Gas is expensive as it is let alone paying additional 20% in interest.

 

[TheBigFig]

You definitely are better off paying them off sooner than later due to the extra interest you'll have to pay. The only possible advantage of keeping an ongoing amt would be to partially help with your credit report as you'll have constant credit going on, although that impact is minimal and much worse if you fall behind and miss a payment or two. Good luck.

 

[LJSquishy]

Absolutely pay off your current balances as soon as possible, and continue to pay new balances off in full each month before interest accrues. Don't let yourself be willing to pay interest. Personally, I would not keep all 3 credit cards.

 

[Marionnette]

You definitely are better off paying them off sooner than later due to the extra interest you'll have to pay. The only possible advantage of keeping an ongoing amt would be to partially help with your credit report as you'll have constant credit going on, although that impact is minimal and much worse if you fall behind and miss a payment or two. Good luck.

Please explain what you mean by that. I have never heard of anything called "constant credit". The only thing that you get when you carry a balance is "constant debt" and that isn't a good thing.

 

[dsneprincess]

I have never heard of "constant credit" either. If you were my kid, I would tell you to pay off your current balance each & every month. If you are carrying a balance, you have spent more than you had to spend. Keep your card at $0 at $0, by paying off any charges immediately. (I would probably NOT charge anything to this card at all & just pay cash for purchases now.)
You should pay down your highest interest charging card first, although in your case, I would get the one with the protection fee paid off ASAP & closed! Keep making the minimum payment on the other cards because you don't want to become deliquent. All frivoulous spending should stop, this means eating out, coffees out, etc. All that money should be put towards re-payment on these credit cards.
This is a slippery slope you are on, you need to halt the spending in its tracks & begin paying down your balance. You should not use the credit card to finance your lifestyle, if you don't have the money for today without letting something else go, you can't afford. Unfortunately, the credit card companies make it way too easy to end up way over your head! Try thinking of it this way: do you want to pay for tonights dinner in 30 days? it is long gone & forgotten by then, but you still owe for it. If you keep paying minimum payments, that just became 1 expensive dinner!!
There is no problem created with your credit by having the cards with $0 on them. Once you learn to budget your money & get your balances paid off, it is ok to charge once in a while & pay off by payment due date with no finance charges. This keeps your accounts open & will continue to build your credit score. Best of luck to you, this is a tough hole to dig out of. You may want to talk to a credit counselor.

 

[pugtails66]

Pay them off, cut them up, and never look back!!!
There is a financial guy, Dave Ramsey, who has a syndicated radio show and is on T. Look him up on Facebook . Heck, post your question to him and explain that your parents are giving you conflicting advice. He will set you on the right path. You are young...don't fall into the credit card frenzy that so many young people do.

 

[Cheshire Figment]

What you have are ripoff credit cards with ridiculous fees. Try to pay them off completely and try to get a legitimate card from your bank.

Also, go to www.creditboards.com and they can give you really good information.

 

[ccgirl]

Using more than half of your available credit hurts more than paying them off will. As others have said, what kind of financial sense does it make to throw your money away? (basically what you are doing by paying such high interest and fees). Don't get in the habit of using cc cards without being able to pay them off in full. They are a trap. Chances are, your credit is already not that great based on the sub prime credit cards you have. YMMV.

 

[disneyfreakk]

Your best bet is to pay off your debt and then worry about working your credit score to your advantage!

But when you get everything paid off, you only want to charge no more than 30% on half of the amount of cards you have, and then pay them off every month. then swich cards around the next month. rinse and repeat! You do not have to be in debt to have excellent credit!

 

[MrPaul]

It's very important to pay your cards off in full each month. Will your credit score go down if you carry a balance? No. It will only go down if you don't make the minimum payment each month.

Even better, pay your credit card in full prior to the bill being generated. Then it shows you have $0 balance.

Over the past year I have started churning credit cards (I'm on my 4th) to get free airfare. This is how I'm going to Disney on Dec 1 with my family. There are tons of websites with all kinds of details on this. But all that matters if you do this...DO NOT CARRY A BALANCE. If you do then you lose.

 

[ZoeBell]

I'd like to give myself a pat on the back for paying $0 interest on my credit card this year. I'm a nut about spending within my means and paying the balance off each month. But it's taken me many years and more money in interest then I ever care to admit.

My advice:
Pay the minimum on everything except the lowest balance and work to pay that off. Then don't use that card again. Once it's paid off go to the next lowest balance and work to pay it off, including the amount you were paying on the 1st card that you now have paid off. You do this until all cards are paid off.
IMO you really don't need more then one cc. I just got a 2nd one which will be my primary card for Southwest points and my Target card will only be used for Target purchases.

 

[EMAW_KSU]

Pay them off and do not use.

 

[seashoreCM]

So after getting conflicting advise from family, I'm gonna ask you guys for some "outsider" advise. (snip)

I have $480 on the $500 credit card with a min. payment of $35 each month.

(snip) The $480 is from a vet bill, and that is the hardest one to pay off. (Payment is $35, but interest and "account protection fee" (can't get this removed, tried) take away a $20 chunk of that each month. :

You're only whittling down the vet bill by $15. each month you make the minimum payment. It'll take you more than two years to pay that off and in that time you will pay over $480. in interest and fees. So the vet bill is really over $1000. instead of $480.

Any family members willing to lend you $480. to pay off the vet bill in full?