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  • Sep 4th, 2007 9:45 pm
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[OP]
Deal Fanatic
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Jun 25, 2003
5239 posts
305 upvotes
Toronto

Debt Question

We were having a discussion at work today.
Heres the thing just want some feedback.

Say someone has about 10000 in debts to his credit cards (only credit card debt no loans or anything else).

And he/she has the full money to pay off all of their debts. (say casino winnings or will)

Is it harmful to your credit to pay off your 10000 dollar load right away ? or are their any disadvantages ?

Just some feedback :)
5 replies
Deal Fanatic
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Nov 13, 2005
5781 posts
193 upvotes
GTA
Me personally I beleive it would be to my advantage to pay it off immediately, however I recall reading from somewhere that it's equally not bad to carry a balance (small mind you, not at the limit) as it will give equifax some history.

From personal experience, I have 2 CC, ones $11k, the other is $2k and a $50k uloc. I pay the CC off every month and carry approx $5k balance on the Uloc. I just checked by beacon score and it was at 825.

sk
Deal Expert
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Sep 19, 2004
22691 posts
4514 upvotes
where I belong
Is that $10,000 a credit card balance (unpaid)
or it's just this month's total that he can still pay on time?

What's the interest rate % on the balance?

Unless it's 0%, it'll probably be 18%+
and unless you can make more from the $10,000 windfall in some ways
PAY IT OFF ASAP


In short, PAY IT OFF
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Sr. Member
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Oct 10, 2006
916 posts
48 upvotes
Halifax
Pay it off right away. Continue to use the card for day to day purchases you would normally be making with cash, debit or credit. Pay that off each month in full so there is no interest.

Lower debt to limit ratio on your card means increased score (sometimes), still using your cards and paying them off increases your score.

Can't think of any disadvantages other than the credit card company being grumpy --hah.

~C
Deal Expert
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Feb 9, 2003
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Langley
FICO scores look at max balance over the last year. Someone who maxes their credit cards and pays them off will have a better score then someone who never uses them. Some people apparently will write a cc cheque to themselves and pay back the cc when the cheque clears. Yes, they'll have to pay interest for a few days, but if you can get some savings on an loan that you apply for the next month, then it's worth it.

But of course it isn't harmful to pay off your cc right away. It's better for your credit to have a low balance AT THE MOMENT but a high balance within the last year.

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