Many people believe that paying off their credit cards every month is a good idea.  And if you are trying to stay out of debt, then I would have to agree with you. If you are trying to build credit and look good to your creditors, then paying off your credit cards every month is actually a bad idea.  Let me explain.

Creditors and lenders don’t make there money from annual fees on credit cards.  They make there money on the interest that you pay each month.  If you are paying off your balances each month, the creditors and lenders aren’t making any money.   Creditors want to see someone that can maintain a balance each month and make payments on time.  This goes a long way in showing your credit worthiness and actually is built into the algorithm that calculates your credit score.   Read the rest of this entry »