Is it wise to pay your bills with a credit card to help build credit?
stepcmpb asked:
My mother just decided to start paying her bills with a credit card to help build her credit history. Is that a good idea?
My mother just decided to start paying her bills with a credit card to help build her credit history. Is that a good idea?
Not unless you want to pay interest on top of what the bills is.
Edit: paying off the monthly bill when you receive it does not build credit it can actually hurt your credit.
Yes, and as long as you pay off the bills each month, you will NOT have to pay interest. In many cases, you will earn points towards merchandise as well, depending on the card.
as long as she pays the balance in full every month
Get a credit card that gives points or airline miles, and pay the bill of 100% each month, and it’s a great way to build credit and maybe get some freebies while you’re at it.
BE CAREFUL. Understand the rules used to determine interest on your bills. Pay $.01 less than the full amount due and you’ll get nailed with interest on the entire amount spent during the month. You pay 100% or you pay interest.
But pay it off, and she’ll have a great credit rating in no time, plus free trips if she spends enough.
paying bills (DEBT) with a credit card (DEBT+interest) is ridiculous, the debt will only increase due to the interest charges, which will only hurt her credit record
Paying off the balance in full every month on your credit card can negatively affect your credit score, . Suppose that you use your credit card to purchase gas, groceries, and everything else each month, always spending around $1,200 each month, but when the bill arrives, you pay the balance in full.
You would think this would earn you bonus points for staying out of debt and paying off the balance in full each month, but not when you consider how you look on paper. What is your credit card issuer reporting to your credit report each month — the total amount you owe at the time of the report and that you pay on time, not the fact that you pay your balance in full each month. Therefore, on paper, it looks like you carry a $1,200 balance on your credit card and never pay it off. And if your credit limit on the card is $3000 or less, then this will indicate you are always using more then 30% of available credit which is a no no as far as credit reports are concerned.
A much better idea would be to have 2 or 3 credit cards and rotate them, using one for a few months, then using another, so that your credit card company can report a zero balance every few months to the three credit reporting agencies which now will indicate that you are paying off the balances.
Hope this answers your question