To think most people don’t actually pay off their credit cards in full each month?

[PoliteCyanViewer]

I always hear advice about clearing your balance each month to avoid interest but how many people actually do it? With the cost of living, unexpected expenses, and temptations everywhere, is it realistic? Do you pay yours off in full or do you carry a balance?

Interest isn’t the only way they make money. They charge vendors transaction fees whenever you use your card. I put everything on my credit card, including very small transactions. I’m pretty sure the company makes a profit from me even though I’ve never paid any interest.

That's the idea of it

Yes, we've always paid it off fully every month. This has changed the last year or so as we moved and had to buy lots of pricey things from scratch. However we take advantage of NatWest instalments, so for a very small fee we can spread our payments. We don't pay any interest and normally even if we've requested to spread a bill over e.g. 6 months we'll pay it off fully in 2 months.

We don’t, but it’s never been a problem. You get more protection using a credit card and I’ve never once missed a payment or been anywhere close to going over the limit. It’s always been manageable.

So, my (clearly limited!) understanding was that the transaction fees went to the credit card 'name' like VISA or MasterCard, and the issuing bank (say, Barclays) made it's money from the interest.

But judging on my record so far today I'm probably wrong.

@ScholesPanda

In fact, those who pay it off every month are increasingly having their cards cancelled as unprofitable customers.

I'd love for you to share your data/statistics for that assertion. I've never heard of anyone being cancelled for paying off every month. We've both done it for 40 years and never a whiff of them cancelling it. In fact, we usually get the credit limit increased every year or two. Interest isn't the only way they make money. They also charge the retailer/supplier a percentage for all transactions, so they probably make more profit from transaction charges rather than interest.

This is correct.

There are various entities that take a cut of the fees but believe me, people who don't pay interest are still making money for credit card processing networks and lender.

Agree. I would never use a debit card at point of sale. To easy for data to be hacked or otherwise compromised. With a credit card there is a buffer between my money and scammers.

What does at a point of sale mean in this context? And at that place why is one card more risky than another?

I have never heard of anyone having their cards cancelled due to paying their credit off in full every month!
Any actual evidence for this?
As several posters have pointed out, credit card suppliers don't solely make money from charging interest on debt

Same here.

We have never had a card cancelled despite paying in full every month. As PP have said, the actually keep increasing our limits.

I’m interested by the people who have used credit cards to buy cars though… whenever we’ve tried that the dealer has always said they have a maximum (low) amount they can accept by credit card, the rest has to by debit card or bank transfer. I think the last time I could only pay £3000 by credit card and I paid the rest by bank transfer. Shame because the points on a car purchase would be fantastic.

I have paid my card off in full for over 30 years and never had any cancelled. They just keep increasing the credit limit each year, so I had to get them all cut back when I wanted to renew my mortgage as I didn't want it to look like I had so much credit.

When I bought a car on a 0% card, it wasn't buying it direct, it was a balance transfer to my bank for £5K which we then used to buy the car. so no points allowed on that.

in fact, those who pay it off every month are increasingly having their cards cancelled as unprofitable customers.

I am old and have never heard this happen to anyone. Friends and family are all fine financially and pay off their cc fully each month. Do you know anyone yourself who has lost their cc by paying off the balance?

We do

Probably not helpful but DH and I don’t have them. They’re an absolute mugs game.

I watched my DPs drowning in debt they could not service for decades - cards, loans, remortgages. It genuinely left me terrified of debt.

Cut them up, pay them off and live within your means. Otherwise think of all the money you spend down the decades on interest that you could otherwise be spending on other things or saving. Don’t neglect your pensions.

Me neither! I pay off mine within the credit window, I've never paid a penny interest in 30+ years - and never been cut off. Love to see some actual evidence that this happens.

It's a mugs game if you are paying interest, when the majority of posters have highlighted that they don't. I earn £250 a year from my credit card in cashback, I'm not the mug in that scenario.

I understand why people won't have them who know they wouldn't pay it off every month/at the end of the 0% interest period. For the rest of us, choosing not to benefit from the section 75 protection for expensive purchases is, well, a mug's game.

I use it for shopping/living expenses but I don’t overspend. I always say it off in full.

How are they a “mug’s game” if always paid off and actually used to one’s own advantage? I’ve had one particular credit card for almost 20 years that I’ve paid off in full every month, never paid a penny in interest or charges.

However I have benefited hugely from collecting points and because we put every single bit of spending on the card, we have reaped significant rewards from the points. Paying on credit card also offers protection.

Sure they’re a bad idea for people with no self control who spend more than they can afford but if used wisely they can be extremely advantageous.

I totally live within my means! Our credit cards actually increase our “means” - one gives us a large amount of cash back every year and the others give us store vouchers! Never had any debt other than the mortgage and even that’s paid off! Never paid interest on anything but the mortgage.

Yep, I do.

Sadly no I don’t! But I’m getting there.

Agree 100%. My Ex always carried a balance so was losing £40 a month in interest, which is an ever decreasing circle. But that's him living beyond his means. It's not the cards, it's the person. I on the other hand don't buy things I can't afford, live simply (hurray for boring!) and pay it off every month. In fact I stick the money I know I'll spend in a bank account so I'm earning credit interest during interest free period between statements. Then pay it off at the last minute.