Paying off credit cards makes sense
Friend who warns of cancellation for paying balances in full may be full of hot air
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EAR HARRY: For many years, I have tried to keep those high-interest credit-card balances at or close to zero. Last night, I was discussing money strategies with some friends when one guy started to pontificate about credit cards. He cited a number of references (I don't even know if they exist) that backed up his position. I told him I was going to get your point of view. He said you were a fool and knew nothing about credit cards. Should I leave a small balance on my cards instead of paying them off each month? He insisted that paying them off will lead to a cancellation of the card in most cases. I've never heard this before - I've never had a card canceled. What's the real score here, Harry?
WHAT HARRY SAYS: Over the years, I have known numerous cases of credit-card cancellation because of nonuse of the card, but never for paying the balance in full each month. As a matter of fact, on my first radio broadcast, a caller asked if it was wiser to pay off credit-card balances than to prepay mortgage principal. I replied that the caller should just take a quick gander at the interest rates. She was astounded at the difference. The card rate was three times the mortgage rate! On a personal level, we have never had a carryover balance on a credit card, and none has ever been canceled. High interest rates on debt are a killer.
Email Harry Gross at harrygrossDN@gmail.com, or
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