we asked in Business & FinanceCredit · 6 months ago

Would it be better to use credit to pay something and then pay the balance off immediately then to pay for something without a credit card?

Would it be better to use credit to pay something and then pay the balance off immediately then to pay for something without a credit card? Because wouldn't you increase credit score whereas paying without credit would be the same thing but you don't increase credit score. So paying by credit would be a better option right as you increase credit score and I am saying this in a scenario where you can pay off your balance immediately. This sounds like a dumb question becuase it probably is but I want to know the answer to it.

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  • 6 months ago

    Pay with the cc, WAIT for the monthly billing statement, review it, and then pay within terms [aka ON TIME]. {Paying immediately after the purchase does NOT help your credit score (because it is as if you incurred no debt [that you had to "prove" you were responsible enough to pay back within terms]) - or cash flow, for that matter.}

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  • 6 months ago

    I do this but I don't pay immediately. I pay by the last day possible to not incur interest. I still get the benefit of using credit and building my good credit, but I also get the benefit of having my money stay in my accounts, earning money for me up to when I have to pay off the balance, and in the meantime, I've gotten the use from my purchase. In effect, I get to eat free, temporarily, from anywhere from 28 to 56 days, depending on when in my billing cycle I bought the meal. I can buy a physical item and get to use it for the same range of time before I actually have to pay for it.

    That is the beauty of using credit when you have the cash to make the purchase. A side benefit is having a printable record of all purchases, which can help with budgeting and preparing tax returns.

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  • Judy
    Lv 7
    6 months ago

    Makes sense, plus on most cards you get points.

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  • Amy
    Lv 7
    6 months ago

    Yes, to a limited extent. Your credit score will be the same whether you use the card for every purchase or just once per month - it only matters that you paid your bill for that month.

    You also don't need to pay it off IMMEDIATELY if your card doesn't charge interest until the end of the month.

    There are advantages to using a credit card (e.g. you can cancel it if you get robbed) and advantages to using cash (e.g. you can't spend more than you have). Credit score should not be your only consideration in deciding which method is "better."

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  • DEBS
    Lv 7
    6 months ago

    Using your credit card helps your credit score. You don't have to put everything on there. You don't need to pay it 'immediately'. As long as you pay the balance of your statement on time, you will not get charged interest. So paying it once a month on-time is fine.

    Paying with credit with a card which offers rewards means you're getting things cheaper (taking into account the usage of the rewards.)

    There are studies which show you spend less if you use cash as opposed to a credit or even debit card. Handing over cash makes you think twice about what you're purchasing.

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  • 6 months ago

    Using a credit card and paying on time may? positively affect your credit rating - or at least give you a credit history on the various systems that track credit reports.

    As long as you pay on time so there are no charges, it also has other benefits.

    eg. You have an independent record of when things were bought, if you need it to prove a warranty claim.

    For larger items, the credit card company provides a safety net in that you can reclaim the money for a purchase if it the item is not what it was supposed to be - eg. if you buy an expensive TV & it goes wrong but the seller denies responsibility, you can reclaim the money.

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    • SumDude
      Lv 7
      6 months agoReport

      @we - ON TIME means within the "grace period" - NOT "immediately" (aka same day) as you asked in your question.

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  • 6 months ago

    If you just pay your bill every month, it doesn't increase your credit score. To increase your credit score you have to borrow money and pay it back on time.

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    • Steve D
      Lv 7
      6 months agoReport

      And this is incorrect - using a credit card is borrowing money (the store charges the credit card company which loans them money to pay the bill and then charges the buyer by advancing that cash and billing him/her. See my answer.

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