When Should You NOT Pay Off Your Credit Card Every Month?

One of the best ways to use a credit card responsibly is to pay off your entire balance every month.

Using your credit card comes with the convenience of paying with a mobile wallet or wearable device. You don’t have to worry as much about having cash or finding an ATM. Plus, in many cases, you’ll be racking up rewards points that you can redeem for money back.

Of course, you do have to be disciplined. Create a budget and stick to it. If you can’t manage to pay off your balance in full, you’ll be stuck with finance charges you didn’t plan for. With many credit cards, interest rates can range up to 20% or more, outweighing those 2 or 3 percentage points of rewards you just earned.

Carrying little or no balances on your credit accounts, referred to as low credit utilization, may also help improve your credit score. To maximize your rewards and minimize your finance charges, it makes sense to build a habit of bringing your balance to $0 each month.

Still, sometimes it might make sense for you to break your own good habit.

When it’s OK to carry a balance

There are plenty of purchases where you may not want to pay the grand total all at once. For example, consumer electronics like a new smart phone, television or laptop. Major appliances like an oven/range or washer and dryer. New living room furniture. Landscape design. Maybe even a vacation.

Whether the purchase is a few hundred dollars or a few thousand, your credit card may be the right option to pay little or no finance charges over time.

Look for zero percent financing. Home improvement, furniture and big box stores will often offer 0% financing deals on large purchases that allow you to pay zero interest over a period of time. The same can be true for online stores. Often depending on the price of the purchase, terms can commonly be six, 12, 18 or 24 months.

If you are planning to make a big purchase, and a 0% deal is available, these flexible plans won’t cost you any more than if you paid all in one swoop — as long as the balance is fully paid before the deal expires. If you extend past the length of the terms and still have not paid off what you owe, the financer will charge you back interest for the entire period.

Take advantage of enhanced rewards. Those same stores, along with department stores and retailers like Target will often offer you rewards for big purchases in the form of points or cash back — sometimes in lieu of financing. If the thought of getting more money to spend at a certain store appeals to you, make sure to sign up for rewards programs.

Some rewards programs require you to apply for or have a store credit card or to put your purchase on a store credit account. If you decide to go this route, take the time to examine your interest rate and the potential finance charges if you were to carry a balance past your first payment.

Store credit options tend to have higher interest rates than your other credit cards. Remember, you can always make a purchase with a store credit option or a higher-interest rewards credit card to get the points, but your balance doesn’t need to stay on those cards.

Transfer. Save. Repeat. If you have a credit balance that you would like to pay over time, don’t settle for paying finance charges at a high interest rate. Your other credit cards may offer you great deals on transferring a balance at a low rate.

For instance, your CoastHills Encore Signature or Platinum Rewards Visa credit card allows you to transfer a balance with no fee with an interest rate of 1.99% for an introductory period of six months¹. Let’s say you transfer a $5,000 balance and carry it for a month, your first finance charge will be under $8.30, and it would go down each month with regular payments.

That’s a fantastic option if you plan to pay the balance in full within the six-month promo period. Even if you don’t, you won’t be charged any back interest, and your rate will only change to your standard rate, which starts as low as 7.99% APR².

Major credit cards may offer you 0% financing deals on balance transfers, sometimes with terms of 6, 12 or 24 months, but be careful to read the fine print. A majority of those offers charge transfer fees from 3-5% that can actually cost you money. Transferring a balance of $3,000 to your CoastHills Visa card can save you up to $150 compared to other financial institutions.

Do the math. No fee and a low rate might be a better deal than 0% interest and a large fee.

¹APR= Annual Percentage Rate. 1.99% intro APR for 6 months from the date of first transfer. Existing CoastHills Visa balances not eligible for balance transfer APR. After the intro APR expires, your APR will be 7.99% to 17.99%, based on your credit worthiness.

²APR= Annual Percentage Rate. 7.99% APR is our lowest rate. Your APR may vary depending upon your credit score. All applications are subject to credit approval. All rates are subject to change without notice.