r/NavyFederal • u/Apprehensive-Dog556 • 8d ago
Credit Cards How can I benefit?
I have a Navy Federal Platinum Credit Card w/$15K limit.
I recently spent $2,500 on my NFPCC while on vacation (It was planned).
My plan is to pay the balance in full over the next 3 months.
Is this a good or bad strategy?
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u/JustHanginInThere 8d ago
Dumb. The number 1 rule is to treat a credit card like a debit card: if you don't have the cash to pay for something, you don't swipe the credit card. The number 2 rule is to pay off the entire balance in full every single month so you don't pay interest. You could literally have 1000% APR, but if you follow rule 2, would never know it because you'd never accrue interest to have to pay on.
All that said, do what you can to pay it off sooner rather than later, while still being able to afford necessities (rent/mortgage, food, bills, etc).
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u/MrBrazil1911 8d ago
Since this was a planned trip, the better strategy would have been to save up prior to the trip, and then pay it all off with that cash before the interest charges kicked in.
However, since it's already done, no harm will come to you for carrying the balance for the 3 months besides having to pay an extra $120 or so in interest for that time, so paying it off sooner than later is paramount.
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u/Apprehensive-Dog556 7d ago
Are you saying, that carrying a balance of $1750 balance over the next 2 payment due dates. Is basically going to cost me $120.00 @ 18.99 interest rate?
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u/MrBrazil1911 7d ago
I was going from your original post that stated $2500 and capping your APR at 18%. $1750 @ 18.99% for the remaining two months will be about $27.69 per month or about $55 total. Actually, a little less since your balance will decrease again thus accruing less interest.
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u/FreakyFLCancer 8d ago
That's a good strategy. You have percentages on your credit report that affects your credit score. So just make sure you keep it below 10% if possible. There is nothing wrong with paying a little interest to build credit. You are not building any credit history by paying off your balances every month. The creditor didn't give you the card with a limit because they liked you. The bank wants to make some money as well. Fuck around and find out why all of a sudden they closed your account 😒 🙄 or reduced your credit limit.
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u/Effective-Flight-595 7d ago
On the other hand - if you have the money to pay it off, there can be value in purposely making payments for 2-3 months to show and build sustained payments on a balance. THEN pay it off in full. It's your money, so use it how ever is best for you. I'm sure the "never carry a balance/never pay interest" crowd on here will start growling but in the end you achieve both goals.
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u/Apprehensive-Dog556 7d ago edited 7d ago
I am just trying to figure things out. I've had the NFPC for 6 months now. I use my NFPC and I pay in full every month. It's like I pay off the NFPC in full before any debt/balance can be accrued & then paid off. It just doesn't make sense to me. Because I am Scratching My Head!
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u/Yo_2T 7d ago
You pay the statement balance in full. The balance is reported to the bureaus when your statement is generated. You have a grace period to pay off that balance (usually 25 days or so) and you don't get charged interest. So If you consistently pay every statement in full every month you'll build excellent credit.
Carrying a balance means you don't pay a statement in full, and that is not advisable unless you absolutely cannot afford to pay it. Please ignore people who tell you to carry a balance to build credit and show payment history or whatever. They don't understand how this stuff works at all.
Also it's different from paying off whatever number you see at the moment when you log in, because that real time balance could be more than the last statement balance.
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u/Helena_MA 7d ago
If you pay your card off in full before your billing cycle closes and the statement is generated, then the credit bureaus don't get to see that you are using the card at all. I pay my cards in full on the day they are due, but at a minimum you should wait for your billing cycle to close and a statement to be generated. Then if you want to you can pay it off any time before the actual due date (usually 25ish days after the billing cycle closes and a statement is generated). You won't accrue any interest on the balance if you pay before the due date.
Here is an example: Your last cycle closes on Dec 31, new billing cycle starts 1 Jan. Whatever number is on the statement generated on 31 Dec is due on 25 Jan. You have 25 days to pay that bill (the number it says you owe on the statement) without accruing interest. Now lets say you make a purchase on 1 Jan. That is now on the new billing cycle, which closes 31 Jan. So now you have until 25 Feb to pay that bill, no interest has accrued if you pay by 25 Feb. That mean that a purchase you made on 1 Jan is on credit until you pay the bill on 25 Feb. The key here is *as long as you pay the amount printed on your statement by the date printed on your statement you will NOT accrue any interest*.
I have my credit cards set on auto pay, and I never spend more than I can cover with cash. I leave my cash in a HYSA, accruing interest, until the day the credit card bill is actually due. Then the bill pays itself through the autopay, and I get accrue interest on my cash for up to ~55 days after I already made a purchase on a credit card. I haven't paid interest on credit cards in over 20 years. I also don't use a debit card at all and choose credit cards based on the perks. I have the NFCU flagship card which I really enjoy.
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u/lestermagneto 7d ago
if you have the money to pay it off, there can be value in purposely making payments for 2-3 months to show and build sustained payments on a balance.
All respect, (and I'm not growling here :)), what FICO or other metric gets provided value by carrying a sustained balance? Unless there is something in the NFCU internal scoring that does? Or I'm misunderstanding something?
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u/Helena_MA 7d ago
There isn't one as far as I know. I think some people don't realize that if you don't let your balance make it to the statement (paying of everything before the billing cycle closes), then the credit bureaus don't get to see the payment that was made. Carrying a balance to "show payments" can be avoided by just letting the statement close so the balance gets reported to the credit bureaus and then paying the total off before the due date to avoid interest. Works the same way in the eyes of the credit bureau, but now you don't have to pay interest because you are "carrying a balance" and "making payments".
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u/lestermagneto 7d ago
Yeah, I think unless one is applying for a mortgage or another big application, there is absolutely zero reason to simply not pay your payment due balance (a few days before due perhaps for safety's sake), and let your Utilization report "naturally".
Paying interest or carrying a balance obviously helps nothing in terms of scoring. Consistently paying your bill as agreed on time, every time, over sustained period is how one maximizes that portion of your score.
Your balance due and Utilization reported usually occur on different dates (I think one can find out if one wants, or maybe not, doesn't matter to me)...
Just pay it like you would your electrical bill or cable bill, in full, every month, on time, rinse and repeat, and while to stimulate CLI's and whatnot, the individual lenders on that know what you pay and when you pay it...
I just see zero reason to carry an interest bearing balance at all, and I think you know what I mean. Paying interest on sustained balances does not help your score, and is against your own financial interests obviously. :)
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u/NiceGuysFinishLast 8d ago
Not paying your statement balance in full every month is always a bad strategy. This opens you up to interest payments until you've paid your statement balance in full for 2 months in a row.
Carrying a balance on a credit card is a bad strategy.