100,000+ views

1 min

The amount consumers pay per month toward their credit cards gives a pretty good indication of whether or not they will ever be delinquent on their account.

The credit rating agency TransUnion recently ran a study trying to see if there was a pattern between how much people paid toward their cards versus whether or not they would default on their debt.

For this study, TransUnion asked whether a person paid the minimum payment on a card, paid more than the minimum payment or paid the entire balance each month.

The results show 40 percent of card holders pay off their balance in full, 20 percent only make the minimum payment and 40 percent carry a balance but pay more than the minimum.

“Twenty percent of card holders

only make the minimum payment.”

TransUnion found card holders who only made the minimum payment had higher delinquency rates not only on credit cards, but also other debts like mortgages and car loans.

Card holders who carried a balance but paid more than the minimum were riskier than card holders who paid everything off, but they were significantly better than card holders who only pay the minimum.

This does not appear to be true, and lenders may start to give better terms to clients who carry a balance but still pay more than the minimum. This information also gives lenders another way to review applicants on top of credit scores.

Consumers should keep this information in mind as they pay off their cards. If you can’t pay off your full balance, try to pay more than the minimum, as this will make you look like a safer credit risk.

Source: nationalmortgageprofessional.com. Photo: www.actevablog.com.

Advertiser Disclosure

BadCredit.org is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). BadCredit.org does not include listings for all financial products.

Our Editorial Review Policy

Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the content’s accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our site’s advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our site’s About page.

About The Author

David Andrew is a former New York Life financial adviser, holding Series 6 and Certified Financial Planner credentials from his years with the company. He also holds degrees in economics and finance from McGill University. David is now a well-published finance writer with special expertise in credit cards and auto insurance. In addition to his work on BadCredit.org, his articles have been featured on eHow, Zacks.com, TheNest.com, Chron.com and other popular sites. When he's not keeping up with the latest news in the world of finance, David enjoys playing tennis and golf.

« Back to: Studies