Does Chase Pay Over Time Affect Credit Score?

Most Chase credit card users are usually concerned if utilizing the Pay Over Time option affects their credit score. Chase Pay Over Time is a feature that allows users to pay for some of the purchases in installments instead of making full payments on every statement. This is good for big purchases but do you know that it can harm your credit?

What Chase Pay Over Time Involves?

Chase Pay Over Time is enabled by default in most Chase credit cards such as the Chase Sapphire Preferred and Chase Freedom Unlimited among others. It enables you to purchase goods and services on credit and then repay with interest in installments over a certain number of months.

Every time you use your Chase card to buy something, you can either pay the balance in full or participate in the Pay Over Time program. If you select Pay Over Time, the total amount of that purchase balance will not be due in the following billing cycle. However, it will be charged a balance and you can clear it little by little with interest in several months.

Chase Pay Over Time has two primary choices: The customer can make fixed monthly payments or variable payments. Fixed monthly payments entail making equal payments towards your Pay Over Time balance each month. Variable payments are when one is required to pay at least monthly interest plus one percent of the total balance on the outstanding amount each month.

Is Pay Over Time Bad for Your Credit Score?

Chase Pay Over Time does not hurt your credit score by any means. Paying a balance off each month usually only affects your credit utilization ratio – it does not affect your credit history or any other factor that affects your score.

Credit utilization is the ratio of your credit card balances to your credit limits at any single point in time. This utilization ratio contributes to about 30 percent of credit scores on the FICO scale. The nearer to zero your utilization is the better your score. A majority of analysts suggest that the ideal ratio should be below 30%.

That is why when you use Pay Over Time to pay for a purchase in part instead of paying the amount in full, the amount you have paid forms part of your total credit card balance. A low credit card balance means low utilization while a high credit card balance means high utilization. Therefore, Chase Pay Over Time could potentially affect your credit score in the negative if the total amount rises significantly.

However, if you do not bring the credit card balance to its limit, Chase Pay Over Time should not cause significant harm to your credit scores. Balances that are low and reasonable are usually handled responsibly and will not harm your credit rating. There are lots of people who have used Pay Over Time and noticed no negative impact on their scores.

Chase Pay can be quite useful in the long run if it is used properly and without negatively impacting the credit score.

If you want to use the Chase Pay Over Time feature to finance a large purchase without hurting your credit, here are some tips.

• Dividing the total you wish to buy among the several cards helps you avoid running out of one card.
  
• At least, pay the minimum required each month to avoid credit score problems and late payment penalties.
  
• Paying more than the minimum is advised always since it helps speed down the debt balance reduction.
  
• Limit Pay Over Time should only be used for one or two large purchases at any one time, not for numerous little ones.
  
• Pay entire statements on every card not covered by the Pay Over Time option.
  
• Additionally, keep a vigil on your credit score by routinely checking it now and again.
  
• Keep the credit card balances overall low relative to the credit limit.
  
• If you would want extra credit on your Chase credit card, apply for a higher credit limit.
  

So long as you adhere to credit best practices, Chase Pay Over Time can be utilized tactfully without harming your scores. As long as you are making money and paying your credit card bills responsibly, your credit score will remain healthy and stable with low credit card utilization. However, if you observe that your scores are dropping, you should take a closer look at your balances.

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