Should I Pay off My Credit Card After Every Purchase?

Clients who are considering applying for a home loan product should understand that credit cards play a big role and have the potential of negatively impacting their chances for approval. Brokers should be well informed on the various aspects of a credit card to successfully provide their clients with assistance.

Clients may inquire about if they should pay off their credit card after every purchase. A client who regularly uses their credit card can benefit from repaying after every purchase or paying in full, which can be better for their credit score than carrying a balance over from month to month. However, how often a client uses their credit card can significantly affect their credit score. 

What Happens When a Client Makes Additional Credit Card Repayments?

If a client makes an extra credit card repayment, the funds will be directed to the credit card’s principal amount rather than interest. Clients should not be penalized for making additional credit card repayments, however, this can vary depending on the individual credit provider and their established rules and regulations. 

An online Credit Card Calculator can allow clients and brokers to gain an idea of what their potential or existing credit card repayments will look like.

Are Minimum Payments Effective?

The purpose of minimum payments is to satisfy the creditor. However, when a client pays only the minimum payment due on their existing credit card, they will only pay off a small percentage of their balance each month.  When compared to making payments that equal more than the minimum balance due each month, debt will not be paid off quickly. Interest charges will continue to accumulate on the remaining balance. This can cost a client far more over the duration of the repayments.