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What Advantages Do We Have by Paying Credit Bills in Full?

2008-03-14

Like it or not, there can be various unforeseen situations in our life. There are a great number of people who cannot control their budgets and money slips through their fingers like sand. It's not surprise that they cannot scrape up enough money to pay all the bills in due time. Credit issuers have no sympathy to these customers, all the more so, they set extremely strict credit rules and you should be a huge fan of iron discipline to find these credit rules fair. However, there are people who manage to make the most of their credit cards. Interestingly, some of these diligent cardholders treat credit cards like an alternative method of payment rather than primary.

Now that every single customer carries a credit card or at least tries to obtain the one, the statements of individuals that they live perfectly well without a bunch of plastics, sound incredible. Moreover, these customers are quite satisfied with a cash back card that gives them generous rewards.

Take for example the story of Karen Roberts who doesn't carry a balance on her card. "I need it just for convenience and some perks. I pay it in full every month and get reward points for this". This approach to credit loans can make sense for those customers with self-control and good financial habits. Living within your means and using credit cards for getting benefits - that's really impressive.

The question is, how can a customer (who is not so fond of plastics) apply for a credit card with rewards? Oddly enough, these cardholders have a good credit. But still it's not quite clear how they manage to boost their score using the only one credit card for years. You can always find some smug cardholder among your friends or colleagues, who is so brilliant to carry the only plastic and it's only for getting a free airline ticket for example.

Using your rewards plastic from time to time and paying off your balance in full seems so simple at first sight. You lose nothing but receive additional benefits. It sounds too good to be true. But let's take a closer look at these skillful cardholders.

Probably, it's not so hard to pay off your credit bills, if you have one credit card and make occasional purchases on it. There is an assumption that if you don't carry a bunch of plastics, you can hardly establish a solid credit rating. It's true to a certain extent.

Generally, cardholders are so excited with the idea of getting plastics that they can hardly resist the temptation of spending more than they actually have. It's a vicious circle for most credit consumers. "Shop till you drop" has become a motto for millions. There's no need to speak about the consequences of this approach. Statistic figures speak louder than words. The total debt of American consumers is $53 trillion, that's the highest debt ratio in history by the way. This horrifying figure may serve a stimulus for those want to start paying off their credit bills in full.

I pay off my balance in full and enjoy the privilege of 5% cash back. that's cool really!

Frankly speaking, I don't quite catch how the companies will beneift from these accounts. They need to make money on borrowers.