Credit cards are evil! Unfortunately, they are a perceived necessity in our society. A constant stream of commercials and advertisements bombard the senses, propagandizing why the customer should choose one business’s card over the competitor’s. Some individuals believe that carrying a credit card balance is beneficial to their credit score and helps it improve. The Internet is littered with examples addressing that fact. However, it is important to pay off credit cards each month because if not, a borrower may have to choose between keeping up the credit card payments and necessities, be immersed in a never-ending cycle of debt, and realize damage to their credit score or ability to borrow money in the future. I know, because I once
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As mentioned earlier, many people believe that carrying a credit card balance is a good thing. Unfortunately, carrying a balance can adversely affect a borrower’s creditworthiness due to intricacies within the financial system. Insurers look at a borrower’s credit score when determining the individual’s home and auto insurance rates. Some customers pay higher interest rates than others simply because their credit score is lower since a borrower’s credit score also determines the interest rate on financing to purchase a home or vehicle. Consequently, one person may pay less for the same home at the same price simply because they were able to get a better interest rate. In addition to two borrowers paying two different amounts for the same product, low credit scores can also mean denial by creditors for future credit requests. Creditors don’t like to loan money to those borrowers deemed “high-risk.” A high-risk borrower is less likely to pay the money back, so the easiest way to maintain a high credit score and creditworthiness is by paying credit cards in full every month and avoid the cycle of …show more content…
The first reason is to avoid deciding between keeping up credit card payments and purchasing necessities, the second reason is to avert a never-ending cycle of debt, and the third reason is maintaining the best credit score enabling the borrower the ability to borrow money when he or she most needs it. Therefore, even though most people believe that it is in their interest to carry a balance on their credit cards, I know it causes me undue stress and squanders my hard earned money to not pay off my credit card balance each
As mentioned earlier, many people believe that carrying a credit card balance is a good thing. Unfortunately, carrying a balance can adversely affect a borrower’s creditworthiness due to intricacies within the financial system. Insurers look at a borrower’s credit score when determining the individual’s home and auto insurance rates. Some customers pay higher interest rates than others simply because their credit score is lower since a borrower’s credit score also determines the interest rate on financing to purchase a home or vehicle. Consequently, one person may pay less for the same home at the same price simply because they were able to get a better interest rate. In addition to two borrowers paying two different amounts for the same product, low credit scores can also mean denial by creditors for future credit requests. Creditors don’t like to loan money to those borrowers deemed “high-risk.” A high-risk borrower is less likely to pay the money back, so the easiest way to maintain a high credit score and creditworthiness is by paying credit cards in full every month and avoid the cycle of …show more content…
The first reason is to avoid deciding between keeping up credit card payments and purchasing necessities, the second reason is to avert a never-ending cycle of debt, and the third reason is maintaining the best credit score enabling the borrower the ability to borrow money when he or she most needs it. Therefore, even though most people believe that it is in their interest to carry a balance on their credit cards, I know it causes me undue stress and squanders my hard earned money to not pay off my credit card balance each