Got Netflix? Are you a Deadbeat?
"Money Explained - Credit Cards"
Do you pay off your credit card balance in full every month? If so, your credit card company may consider you a deadbeat. According to the Credit Cards episode of "Money Explained," a Netflix series, transactors are deadbeats. So what exactly is a transactor? The episode's narrator defines a transactor as "someone who pays their bill in full every month." 😲Shocked? I know I was. But, once I learned what a transactor was, I realized I am a deadbeat, and I guess I'm alright with that.😂
Credit card companies don't want people who pay back their money every month and they don't want people to never pay back their money.
It's OK to be a Deadbeat😮😉
What's wrong with paying your bill in full every month? While bankers and creditors may benefit from you carrying debt from month to month (they call these customers revolvers), how does that actually benefit you? It does not. Typically it's better to focus on lowering and eventually eliminating your credit card balances. Credit cards typically have high interest rates, which can drastically increase the cost of an item you purchase on credit. Also, having high credit utilization percentages (above 30%) can lower your credit score.
Side Note: Credit utilization is basically the percentage of what you owe versus the amount of credit available to you. If you had a card with a $1,000 credit limit and you charged $800 on that card, your utilization would be 80% on that particular card which would negatively impact your credit score, possibly by 75 points, given it was your only card and available credit. That would not be good from a credit standpoint.
Benefits of Being a Credit Card Deadbeat
- No Late Charges👍
- Avoid High-Interest Rates👍👍
- Lower Credit Utilization👍
- More likely to improve credit score🎉
I thought 💭it was good to have some debt.
Some may argue that having a $0 balance is not a good thing, but the truth is that having a $0 balance is fine as long as you are actively using your credit cards. Even if you pay your balances in full every month, there is still utilization, and you're still showing how well you can handle debt.
If you're ready to sympathize with the credit card company, 🙅pump your brakes. They still make money every time you swipe. They're called processing fees ( I know because I pay them as a business owner 😭).
The episode states that about 40% of adults are revolvers, and about 40% are transactors, while the remaining 20% are basically not playing the game and don't have a credit card. Do yourself a favor, join the 40% of transactors and pay down your credit card balances - as much as you can and in full whenever possible.
Managing your Money like a boss, in this case, means being a credit card deadbeat. 😎
Deadbeat = Doing Everything to Avoid Debt Better Example As Transactor😏