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11-08-2002, 09:07 AM

And that's fine. I have been told, very clearly, by a number of sources, that carrying a balance will improve credit ratings more quickly than not carrying a balance. I've been trying to carry a balance, but if it's not working, well, I dunno. Maybe my credit is now going up faster because of the loan I mentioned before - on which I am making payments every month.

Perhaps I will apply for a better credit card from my credit union and let it carry a bit of a balance, so I can make payments on it and make my credit go up quicker.

blowmee says it shouldn't work that way; he's right. But it doesn't matter, because it does work that way. And the better credit you have, the lower interest rates you pay in the future. I am not independently wealthy, and I do plan to own a home, which means I will need to borrow money. Let's examine the difference between 5.5% and 5% on a $200,000 mortgage over 30 years, shall we?

5.5% with no money down over 30 years comes out to 360 payments of $1,135.58 - for a total of $408,808.08.

5.0% with no money down over 30 years comes out to 360 payments of $1,073.64 - for a total of $386,511.57.

The difference in the two is $22,296.51 - enough to buy a pretty decent car.

Suppose, then, that you put that extra money ($61.94 a month) into investments (stock market). We'll pretend that you only invested the saved monies at the end of the year - for the sake of simplicity. Suppose that, over time, your investment averages 20% each year - not at all unheard of in stocks and probably about average. At the end of that 30 year period, said monies would be worth approximately $877,725.65.

I fail to see how turning $65 a month into almost a million dollars over thirty years is a bad thing.

11-08-2002, 09:07 AM	#11
dave Guest Posts: n/a	And <b>that's fine</b>. I have been told, very clearly, by a number of sources, that carrying a balance will improve credit ratings more quickly than not carrying a balance. I've been trying to carry a balance, but if it's not working, well, I dunno. Maybe my credit is now going up faster because of the loan I mentioned before - on which I am making payments every month. Perhaps I will apply for a better credit card from my credit union and let it carry a bit of a balance, so I can make payments on it and make my credit go up quicker. blowmee says it shouldn't work that way; he's right. But it doesn't matter, because it <b>does</b> work that way. And the better credit you have, <b>the lower interest rates you pay in the future</b>. I am <b>not</b> independently wealthy, and I <b>do</b> plan to own a home, which means I <b>will</b> need to borrow money. Let's examine the difference between 5.5% and 5% on a $200,000 mortgage over 30 years, shall we? 5.5% with no money down over 30 years comes out to 360 payments of $1,135.58 - for a total of <b>$408,808.08</b>. 5.0% with no money down over 30 years comes out to 360 payments of $1,073.64 - for a total of <b>$386,511.57</b>. The difference in the two is <b>$22,296.51</b> - enough to buy a pretty decent car. Suppose, then, that you put that extra money ($61.94 a month) into investments (stock market). We'll pretend that you only invested the saved monies at the end of the year - for the sake of simplicity. Suppose that, over time, your investment averages 20% each year - not at all unheard of in stocks and probably about average. At the end of that 30 year period, said monies would be worth approximately <b>$877,725.65</b>. I fail to see how turning $65 a month into almost a million dollars over thirty years is a bad thing.