Your Questions About Pay Off Credit Card Every Month

Steven asks…

If I pay my credit card off completely every month, then how does a credit card company make money off of me?

i’ve paid my credit card every month completely since i’ve had it. i have excellent credit. My credit card is American Express. If they know I pay it off every month then why do they keep sending me mail for new cards for being such a good customer.

Oh yeah, I don’t pay any yearly fees or anything. Do they make any money off me?

richmama answers:

Sure they make money off of you. They make money off all of their cardholders. They charge merchants that bill your credit cards certain merchant transaction fees. These fees are usually negotiable. Am Ex charges the most, it could charge a merchant who doesn’t negotiate the fee more than 4% of the transaction amount. Visa and MasterCard charge less, usually about 2-3%. They are smart, this is whay they are in business!

David asks…

is it better to pay a credit card off every month or just make payments?

I just got my first credit card and don’t know if I should pay the whole balance off every month to avoid interest, or if I should pay the minimum until its paid off.

richmama answers:

Always pay it off. Paying interest only makes everything you buy more expensive. Plus credit debt is not “good” debt, like a mortgage.

Mark asks…

If I pay every credit card off in full, can my score still be impacted negatively if I have a lot cards?

I have about 1 major credit card and about 10 from various stores I shop at. I like to open them because of the discounts but always pay EVERY card off in full every month. Is my credit still affected negatively from having too many?

richmama answers:

Yes. When you apply for a major loan, like a car or house, the lender is going to look not only at how much you currently owe, but how much credit you have available. They want to see how much you COULD owe if you maxed out all your cards.

Mary asks…

I pay my credit card balance off every month but I am still being charged interest!?

Every month I pay off my credit card and I am still being charged interest on my purchases. Is this right? I have not missed a date or anything. I have never carried a balance month to month. Now I did do a 12 month 0% balance transfer on this card but does that mean that they can charge interest on my purchases even though I pay the purchase balance off each month. Someone please help!!

richmama answers:

You’ll have to read your card agreement. It could be that the 0% is only valid of you do not make any purchases on the card. They know that you will not read the agreement and will make a purchase, nullifying the 0% interest rate agreement. And the agreement won’t be in simple, easy to understand English, but a convoluted legal passage of words.

Some cards have no grace period for purchases. Sounds like that’s the type of card you have

Cash advances (handled differently than purchases) have no grace period on any card that I know of.

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