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Maxing out credit cards, carrying over balances, and paying in full

I'm curious about something concerning maxing out credit cards and carrying over balances.So my mother says she maxed her credit card. Say she carries over her balance over to next month because she can't pay off all of it this month. Next month, in a couple of days, she'll carry over her balance; as a metaphor, she still has food on her plate she still has to finish eating but can't eat another bite. Will she then get a new plate next month from the credit card company to keep charging on her credit card even though she carried over a balance and is still trying to pay it? She still has her leftovers to her right (her carried over balance) but she'll get a new plate ready to be occupied with foot (debt), correct? Or will her credit card stay maxed and get denied when she tries to use it until she frees up some of her credit limit?

 

Sorry for the complicated explanation.

 

Also, how exactly do you pay in full? Like say I was at the store right now and I'm about to use my credit card to pay for a purchase. When I get home can I go online and pay off my credit card that same day using my checking account or do I have to wait for the bill to be mailed to my address?

 

Thanks!



Personal finance classes should be required in high school and middle school.
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Re: Maxing out credit cards, carrying over balances, and paying in full

If your mom continue to seek credit while having maxed out card reporting, she will eventually get denied for new credit. 

 

 If you charge something on a new card today, you won't be able to immediately go to the website to pay if off.  You would have to wait until the balance post.  

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Re: Maxing out credit cards, carrying over balances, and paying in full

Ah, okay. Thank you for the quick response!


Personal finance classes should be required in high school and middle school.
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Re: Maxing out credit cards, carrying over balances, and paying in full

[ Edited ]

 

 

Pay in Full means paying the complete statement balance by the due date.   Generally, this will avoid the payment of any interest.  

 


Charges on your card may show up immediately or take a week, depending on how the merchant and the bank handle the billing.   Gasoline charges often take several days.

 

Payments made may take a few days to post to your account.    And it may take up to 10 days before the bank decides to make the credit available on your account.    Since your mother is maxed out, she needs to watch the available credit on her account and not charge anything that would exceed this amount.  If you exceed it for a day, fees may be assessed or the charge denied.

 

People may pay online right after purchase for several reasons.  You want to do it to:  Reduce balance to free up more credit and stay under maximum credit limt.  And reduce interest since it is based on average daily balance.  

 

 

Hope this helps

 

Message Edited by Wolf3 on 02-24-2010 02:37 PM
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Re: Maxing out credit cards, carrying over balances, and paying in full


Ayemageyene wrote:

I'm curious about something concerning maxing out credit cards and carrying over balances.So my mother says she maxed her credit card. Say she carries over her balance over to next month because she can't pay off all of it this month. Next month, in a couple of days, she'll carry over her balance; as a metaphor, she still has food on her plate she still has to finish eating but can't eat another bite. Will she then get a new plate next month from the credit card company to keep charging on her credit card even though she carried over a balance and is still trying to pay it? She still has her leftovers to her right (her carried over balance) but she'll get a new plate ready to be occupied with foot (debt), correct? Or will her credit card stay maxed and get denied when she tries to use it until she frees up some of her credit limit?

 

Sorry for the complicated explanation.

 

Also, how exactly do you pay in full? Like say I was at the store right now and I'm about to use my credit card to pay for a purchase. When I get home can I go online and pay off my credit card that same day using my checking account or do I have to wait for the bill to be mailed to my address?

 

Thanks!


"Maxing out" by definition means she has charged up to the maximum limit of her card. If she makes no payment, then she cannot charge any more. If she has made a partial payment, she will then have that amount available to charge. For a simple example, if her limit is $1000 and she charges $1000 (full plate), but then pays $200 (cleans part of her plate), she would only have $200 available (like when you had to eat what was on your plate before you could have dessert). In reality, this doesn't factor in fees and interest, so she would actually have less than $200 available. Carrying a balance means carrying over to the next payment period any amount that you did not pay off this period. This is a quick way to get in over your head with fees and interest.

 

Paying in full just means paying each month for all charges from that month. So if your statement says you owe $500 and you pay $500, you have paid in full (cleaned your plate, to use your analogy). You can do this online before the statement cuts if you want, or you can wait until it is mailed to you.

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Re: Maxing out credit cards, carrying over balances, and paying in full

[ Edited ]
Not sure if I saw this among the great replies, but even if she doesn't try to use the card again, if it's literally maxed out, then it will go over-limit when they put on the next interest charge and any other fees that might be generated.

To use your plate of food analogy, this would be the addition of another ladle of steamed vegetables to a brim-full plate, and food starts falling off of it.

If I may ask, is she in a one-time money pinch, or does she not understand the proper care and feeding of credit cards? Current interest rates now match those that used to be charged by loan sharks, with threats to break your kneecap as incentive to pay promptly.


eta: LisaPA outtyped me!
Message Edited by haulingthescoreup on 02-24-2010 03:47 PM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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Re: Maxing out credit cards, carrying over balances, and paying in full

[ Edited ]

LisaPA wrote:

Ayemageyene wrote:

I'm curious about something concerning maxing out credit cards and carrying over balances.So my mother says she maxed her credit card. Say she carries over her balance over to next month because she can't pay off all of it this month. Next month, in a couple of days, she'll carry over her balance; as a metaphor, she still has food on her plate she still has to finish eating but can't eat another bite. Will she then get a new plate next month from the credit card company to keep charging on her credit card even though she carried over a balance and is still trying to pay it? She still has her leftovers to her right (her carried over balance) but she'll get a new plate ready to be occupied with foot (debt), correct? Or will her credit card stay maxed and get denied when she tries to use it until she frees up some of her credit limit?

 

Sorry for the complicated explanation.

 

Also, how exactly do you pay in full? Like say I was at the store right now and I'm about to use my credit card to pay for a purchase. When I get home can I go online and pay off my credit card that same day using my checking account or do I have to wait for the bill to be mailed to my address?

 

Thanks!


"Maxing out" by definition means she has charged up to the maximum limit of her card. If she makes no payment, then she cannot charge any more. If she has made a partial payment, she will then have that amount available to charge. For a simple example, if her limit is $1000 and she charges $1000 (full plate), but then pays $200 (cleans part of her plate), she would only have $200 available (like when you had to eat what was on your plate before you could have dessert). In reality, this doesn't factor in fees and interest, so she would actually have less than $200 available. Carrying a balance means carrying over to the next payment period any amount that you did not pay off this period. This is a quick way to get in over your head with fees and interest.

 

Paying in full just means paying each month for all charges from that month. So if your statement says you owe $500 and you pay $500, you have paid in full (cleaned your plate, to use your analogy). You can do this online before the statement cuts if you want, or you can wait until it is mailed to you.


Oh, that makes a lot more sense. :smileyhappy: Thank you!

 

Edit: Oh, one more thing. I was meaning to ask, do all credit card issuers, regardless of instituion whether it be a credit card company or a credit union, post the balance within the same amount of days? Or does it vary because there is a range they are allowed to work within? I know fully well what it means to pay in full but, when I asked my question, I was curious about the process of getting statements and bills.Say I make a purchase today, will I get a statement asking for payment from my CCC or CU in 25 days from that purchase or does it come sooner? I've read on a lot of terms and disclosures that you get a grace period of 25-30 days for purchases to pay it off or pay the minimum. So I assume they send it before 25 days from the purcahse?

Message Edited by Ayemageyene on 02-25-2010 05:02 AM


Personal finance classes should be required in high school and middle school.
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Re: Maxing out credit cards, carrying over balances, and paying in full


haulingthescoreup wrote:
Not sure if I saw this among the great replies, but even if she doesn't try to use the card again, if it's literally maxed out, then it will go over-limit when they put on the next interest charge and any other fees that might be generated.

To use your plate of food analogy, this would be the addition of another ladle of steamed vegetables to a brim-full plate, and food starts falling off of it.

If I may ask, is she in a one-time money pinch, or does she not understand the proper care and feeding of credit cards? Current interest rates now match those that used to be charged by loan sharks, with threats to break your kneecap as incentive to pay promptly.


eta: LisaPA outtyped me!
Message Edited by haulingthescoreup on 02-24-2010 03:47 PM

I literaly don't know. I'm asking this question because sometimes my mother lies to me and says "oh well I don't have any money right now" when she in fact does. So I was just curious if this was another "excuse" from her trying to say she can't do anything about it. She, knowing I barely know much about credit cards, would probably pull this on me. But that's a moot point for now since whatever she paid for appears to be working even though she "maxed out her credit cards".

 

I seriously don't know what she maxed it out on nor how she could have without my dad giving her an earfull. Since I haven't heard anything, I'll just assume she's lying again. She understands credit and debt VERY well. She's still trying to pay off the house from her most prominent mistakes in the past, at least that is what she told me. She has bad credit to say the least, I know that for sure. She doesn't care to prioritize paying off debt over buying mundane toys for my two little brothers every now and then.



Personal finance classes should be required in high school and middle school.
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Re: Maxing out credit cards, carrying over balances, and paying in full

Ah. Sounds like maintaining a wary distance would be a good idea.

I'm sorry to read that your mom is kind of out there. When you can't believe your own family members, that's pretty sad. :smileysad:
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
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Re: Maxing out credit cards, carrying over balances, and paying in full


Ayemageyene wrote:

I literaly don't know. I'm asking this question because sometimes my mother lies to me and says "oh well I don't have any money right now" when she in fact does. So I was just curious if this was another "excuse" from her trying to say she can't do anything about it. She, knowing I barely know much about credit cards, would probably pull this on me. But that's a moot point for now since whatever she paid for appears to be working even though she "maxed out her credit cards".

 

I seriously don't know what she maxed it out on nor how she could have without my dad giving her an earfull. Since I haven't heard anything, I'll just assume she's lying again. She understands credit and debt VERY well. She's still trying to pay off the house from her most prominent mistakes in the past, at least that is what she told me. She has bad credit to say the least, I know that for sure. She doesn't care to prioritize paying off debt over buying mundane toys for my two little brothers every now and then.


I don't want to start anything here, but the thought has crossed my mind that you should watch your own credit reports pretty closely.  There are a number of threads on these boards about family members "borrowing" identities of children, siblings, etc. to obtain credit that they can't get as themselves.

 

Just something to keep an eye on, without knowing anything more about Mom than what you've already stated here... 

 

No disrespect intended to her or you. 

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