Right- even though you'll be encouraged by the 15% off
I mean, they get you with the 10-15% off offers
We've all heard that one before!
Alright, let's move on to our next question from Eddie
If you do sign up, don't cancel the cards though. That can hurt your score too. Just don't overspend with them
Hmm...Joan, what do you think?
Great point, Joan. I was going to ask about that -- closing cards can hurt your credit too, correct?
It shouldn't affect your credit score either way. You are paying off the same amount so the frequency shouldn't matter.
Would you pay less interest if you made weekly payments though Joan? So it wouldn't be accruing as much over the course of the month?
Closing cards hurts your score because you are eliminating that line of credit and lowering your overall line of credit. That means you are using a higher percentage of available credit, which can hurt your score
Jessica has a good point about the interest. Ask your credit card issuer if it calculates interest on your average daily balance. If so, paying weekly should save you some money
So, credit card issuers vary in how the calculate interest?
Eddie, either way, you seem to be on the right track. Good luck!
Alright, here's a somewhat related question from Micahel.
Yes, they can vary although many now use average daily balance. The CARD act eliminated one of the most consumer-unfriendly ways of calculating interest owed.
Good to know, thanks Joan.
Micahel, I've heard of people timing their payments so that when the bill comes due, they don't owe anything.
No, it probably won't . It would depend on when the issuer reported that you paid. Your credit score is a snapshot . On the day before, you have all these outstanding bills. On the day they are all reported "paid", you owe nothing.
But I'm not sure that's a great strategy because your score is only calculated when it's requested--so...if the score is requested mid-month prior to you paying off the balance, you'd show a balance.
Good point, Jessica. So if you're about to apply for a loan, it would be helpful to make sure your balance is paid off?
And you also have to contend with the fact that the information in your credit report can be up to 30 days old...
There is no way to know the exact day it will be calculated so there is a reasonable chance you will have a balance. That is why it's important not to use too much of your available credit
...so if you pay off a balance, it might not show up immediately on your report.
Good point Joan. Pay down what you can before applying for a loan absolutely.
Oh, I see what you're saying Jessica. So, you can't really "time" your credit score.
As long as you pay on time every month and keep your utilization to 30% of your balance if possible, your credit score should stay in the same range and be fine
A good rule of thumb, thanks Joan.
Alright, here's a question about retail credit cards.
Even if you could time when you pull your own report and score, you have no control over when a lender does it
It's better not to apply for a new credit card right before you apply for a loan because that will make your score drop a bit
The worst thing about the store cards are the high rates, but if you pay your balance every month, I don't see why you shouldn't have one.
I personally have several ;)
Can't resist the 15%, Jessica? :)
Nope, J.Crew and Old Navy are my downfall...
...but I pay them off every time I put something on the card.
They are fine . The interest rates are often higher so you have to be careful about keeping a balance. Otherwise , they help you build credit
You get perks for being a cardholder oftentimes--special sales, etc--so it can actually save you money.
True. Stores like loyal customers and using its credit card helps them see you are loyal to it
You're making me want to go shopping!