HOME DEPOT

[lsain920]

Hello my fello Ficoholics, i have a question. I always thought if you utilized the pay no interest until 6 months of 12 months, that your account wouldn't show as "owed". Was this wrong of me to think this way? Ok so let me explain what i am asking, well i have a home depot card and i used it during the no payment no interest til 1/09 promotional period and now its showing on my credit report. I thought utilizing that promotional period would be good for me but it seems i should just pay it off. With that being the case, what's the point of using home depot anyway??????

[Creditaddict]

well if you don't need the multiple months to pay for something than there is no point.

The balance is going to report what your balance is, 0% or not.

[Anonymous]

Yup, I agree with C.a. FICO doesn't care about the interest rate on your card.

I have a no interest card for 9 months. I pay on it, but not in full. It would be silly for me to PIF on a no interest card, while I have other store cards that charge 21%, and a bank card of 29.99%. I PIF the high interest cards, and pay lower amounts on the 0% interest rate cards. Purely economical benefits on my part.

[Anonymous]

Yeah debt is debt. The interest of debt doesn't matter. 0%-36% (max usary rate) is still debt. Student loans in deferment (no interest & no payments) is also still considered debt.

When interest rates were higher the advantage of using 0% was earning "free interest". We did some remodeling and put about $20K on Home Depot @ 0% for a year. We had cash in the bank to pay it but 0% is "free money". Put the $10K in money market and earned 5% - 6%. Paid the card off 11 months later and earned just under a grand by using the 0% instead of paying cash.

Now with short term interest rates much lower and money market returning 3% it is not as valuable.

[lsain920]

I just figured since there is nothing due then there wouldn't be anything to report. Not unless the promotional period is up and i didn't pay it.. BUt i do understand where you all are coming from so it's my fault for being naive.. I lost 4 points because of this new balance.. NOt alot but it make a hugh difference when you're trying to increase your credit score......

So now my question is, should i pay it off so it will report as 0, should i pay on it each month so it will show the balance decreasing or should i wait for the 11 months to be up and just pay it???? I have a mortgage, 2 vehicles and about 8 credit cards so i have no need to get anything else. My only goal now is to increase my scores..

Please help!!!

[Anonymous]

I have a 2K balance on a 5K limit that is going to report soon-

I expect a small FICO hit-

[Anonymous]

In your case, I would be inclined to pay off other credit cards first.* 

If the other cards are carrying a balance and charging interest, it would benefit both FICO and finances to pay them off (lower util %, lower # of accounts with balances, more money in your pocket from not paying interest).  FICO doesn't track historical util.; if you pull your scores a year from now, it won't know whether you paid the card off gradually or in a lump sum the month before.

*Caveat: if your HD is near the limit (or even above 50% util.), I'd suggest paying enough to at least get it below 50%, if not 30%, as there is a FICO ding for high util.

I have a HD card myself; it's nice for the husband's power tools.

-MsMS

[lsain920]

That's just it all my credit cards are PIF except home depot because of the promotion and i have a citi card that is 0% until 10/08. So basically i shouldn't really let it bother me too much that HD is reporting a balance, just pay it like i planned and keep all other balances 0 or at least between 1-9%. Right?

[Anonymous]

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@lsain920 wrote:

With that being the case, what's the point of using home depot anyway??????

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Well, you could buy something for $500, put your $500 in the bank, earning interest, and then pay off the amount at the very end of the "no payments, no interest" period. Then, instead of you paying the CC company extra money in interest, you're actually earning interest.

Or, put that $500 toward an existing CC debt with a higher interest rate...not exactly earning interest, but still saving money.

"No interest, no payments" might not help your FICO score, but it can help your wallet if you play it right.

Message Edited by meadmaker on 04-25-2008 11:05 AM

[Anonymous]

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@lsain920 wrote:

That's just it all my credit cards are PIF except home depot because of the promotion and i have a citi card that is 0% until 10/08. So basically i shouldn't really let it bother me too much that HD is reporting a balance, just pay it like i planned and keep all other balances 0 or at least between 1-9%. Right?

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Yes the hit should be minimal. It would be better to pay down any other debt or just save the money in interest bearing account rather that pay it off.

MAKE SURE YOU MAKE MINIMUM MONTHLY PAYMENT. Even on 0% account you need to make minimum payment or the 0% defaults and it jumps to "normal" rate of 16.99%-21.99%.