When I was younger, about 19 years old, and before I knew how to handle my finances well, etc. I was talked into opening an overdraft protection credit card with my bank. Meaning that if my checking account ever overdrafted, it would come out of the credit card rather than charge me the $25 overdraft fee.
Since I was young and stupid I didn't even bother to look at the interest rate, I just said "Sign me up" because it sounded like it would save me a big amount of money if I ever used it.
As a lot of young and stupid people do, I saw it as free money that I wouldn't have a problem paying back later, and I ran it up to it's $2000 limit. I have done the math and making $100-$150 payments on it, it will take over 10 years to pay it off due to the joke of an interest rate.
My tax return I am getting back is more than enough to pay off the credit card. Which I plan on doing and putting the leftover amount into an existing savings account so that i can protect MYSELF from over draft fees without the disgusting interest rate.
The question I have is about how it will change my credit score. I have heard rumors that paying off a credit card with one huge payment can look bad, also that if I close the credit card rather than keeping it open with a $0 balance could negatively change my credit score.
Are any of these rumors true regarding closing credit card/paying off with one large payment hurting your credit score?
Since I was young and stupid I didn't even bother to look at the interest rate, I just said "Sign me up" because it sounded like it would save me a big amount of money if I ever used it.
As a lot of young and stupid people do, I saw it as free money that I wouldn't have a problem paying back later, and I ran it up to it's $2000 limit. I have done the math and making $100-$150 payments on it, it will take over 10 years to pay it off due to the joke of an interest rate.
My tax return I am getting back is more than enough to pay off the credit card. Which I plan on doing and putting the leftover amount into an existing savings account so that i can protect MYSELF from over draft fees without the disgusting interest rate.
The question I have is about how it will change my credit score. I have heard rumors that paying off a credit card with one huge payment can look bad, also that if I close the credit card rather than keeping it open with a $0 balance could negatively change my credit score.
Are any of these rumors true regarding closing credit card/paying off with one large payment hurting your credit score?
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