I’ve read conflicting reports on this forum about which is best: paying the partial balance or full balance on a Taiwanese credit card.
One post stated that if you pay the partial it can help your credit rating, another stated if you pay only partial - even once - it has a bad effect on your credit rating.
If paying the partial balance does help my credit rating, then I’d like to pay maybe 90 per cent of the balance and let the rest run on. I’m aware there will be an interest charge which is fine, it won’t be much considering the amount that would be outstanding.
[quote=“chelseadagger”]One post stated that if you pay the partial it can help your credit rating, another stated if you pay only partial - even once - it has a bad effect on your credit rating.
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Paying a partial amount will not hurt your credit rating as long as the partial amount that you pay is at least the minimum amount required for that month. (Your credit card statement will specify two amounts – the total amount you owe, and the minimum that you must pay that month.)
I don’t think that paying a partial amount will help your credit rating any more than paying the full amount will, but I’m not sure about this because I don’t know the mechanics of credit rating calculation in Taiwan. It may also depend on what you mean by “credit rating” – whether you mean your credit rating as measured internally by your bank or your credit rating as measured by the Joint Credit Information Center (JCIC).
One thing is certain though: the bank is happy when you pay a partial amount rather than the full amount, because that means you will be paying them interest or a lending fee on the rest.
By the way, you can get a copy (I think one free copy a year) of your Taiwan Credit Report from the JCIC. Information here: jcic.org.tw/jcweb/en/service … ry/public/
Now that is the strange thing: there is no interest charged if I pay back the bill within 4 months. They even let me split purchases like plane tickets, car maintenance and insurance or a new TV over 12 months without any interest charged. And here comes the best: the warranty extends by another 12 months. What’s in it for the bank? It’s a Taishin Card btw.
One thing is certain though: the bank is happy when you pay a partial amount rather than the full amount, because that means you will be paying them interest or a lending fee on the rest.
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Now that is the strange thing: there is no interest charged if I pay back the bill within 4 months. They even let me split purchases like plane tickets, car maintenance and insurance or a new TV over 12 months without any interest charged. And here comes the best: the warranty extends by another 12 months. What’s in it for the bank? It’s a Taishin Card btw.[/quote]
These sound like special promotions to encourage you to buy something that you don’t need. I did this once with a laptop (Best Buy in the US). What’s in it for them is if you forget to pay the minimum once they (might) charge you interest for all of the months that you have had a balance and were getting free interest. That becomes a substantial amount on the large purchases you mentioned since you maintained a high balance in the early months. That was the clause in my fine print.
As for the original post. Just pay off your credit card and avoid the interest. I don’t know the metrics used in Taiwan for credit rating but in the US the big ones are forgetting to make payments, having a high revolving debt on your card (maybe +50% of your credit limit), how long you have had an account (more is better), too many accounts, too many inquiries, how high your overall credit is and several others.
There may or may not be a metric based off of whether or not you actually use your card. I checked my credit rating (US) last year and it was nearly off the scale good and I use my credit cards <5 times/yr now. If you are using your credit card each month then I doubt it matters whether you pay partial or full balance. They might base a tiny amount of the rating on this but most of your rating is about being approved by other banks for credit and you not screwing up (not paying).
My experience:
Most important is, that you pay by deadline, the minimum amount.
1 day later can lead to a bad credit history.
However, if you always pay right in time and even better, pay it off complete, it is easier to increase your credit limit
I think you are mistaking the credit rating results of using your cards a lot, with actually paying them off. Using credit more often does improve your credit rating, this is true. So it is a good idea to use your cards whenever possible, especially on larger purchases as this will improve your credit. However, paying them off doesn’t take any points away from you. So you should always pay off your credit cards in full and never carry a balance longer than a single month. Interest on credit cards is the highest rate you will encounter anywhere (except maybe that scary dude who loans money out of his apartment and always has a couple tattooed up thugs with baseball bats milling around). It just doesn’t make financial sense to be flushing that money down the toilet. Interest free terms and layaways should be treated completely separate from the normal functioning of your card. If it’s financially beneficial for you to take on debt (ie earning more money on free cash flows than the interest on the debt) then go for it. But do it in the most efficient way by securing a line of credit with a relatively low rate, and not by paying astronomical credit card interest.