Wednesday, April 05, 2006

A question about credit card payments

I know that the answer to "How should I pay off my credit cards?" is,
"as quickly as possible," but here's something that I don't remember
anyone having asked yet. Say you have 1k now, or during any given
month, to put toward the sufferin' ol' Amex, right? Does it matter to
Amex/credit bureaus/anyone else whether you put that all down at once,
or pay $250/week, or any other combination? (let me add to this that I
have a 0% interest rate for the next 6 months or so, so daily/monthly
interest implications are minimal). Why do I ask?

1. Tax windfall means I could put a big chunk down here and now,
though I did read one post about an article in which someone was
accused of nefarious business because their credit card payment was X%
larger than usual. Putting a chunk down would make me *feel* good, so
I will.

2. But I'm thinking, as I have done in the past, of whittling that
Amex down further, in a constant trickle of dollars, by setting up
automatic weekly tranfers from checking to Amex. But does it look or
register strangely to have "last payment, $50" when the minimum is
$300, even though I'm still paying a big minimum-covering chunk at
once monthly?

"Look funny to WHOM?" you might ask, re: my above comment about the
perception of a bunch of small but frequent payments. I don't know if
this is still the case, but I do remember some of my past credit
reports listing total balance, minimum, AND last payment amount. I
guess you look like a better citizen when you pay $500, and the
minimum is $300.

I guess it makes practical sense to just do one, maybe two, payments a
month and that is what many of your responses will probably be. But
for those of us who want to see progress toward the zero balance
happening all the time, what are the implications?


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