While the term "deadbeat" generally carries a negative connotation, when it comes to the credit card industry, it's a compliment. Card issuers refer to customers as deadbeats if they pay off their balance in full each month, avoiding interest charges and fees on their accounts.
That's a healthy financial habit, but it makes you less profitable for the card companies who generate a lot of revenue from late and missed payments: In 2022 alone, Americans paid more than $130 billion in credit card interest and fees, according to the Consumer Financial Protection Bureau (CFPB)'s latest consumer credit card market report.
Here's how being a credit card deadbeat can save you money and improve your financial standing.
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What is a credit card deadbeat?
Being a credit card deadbeat means you pay off your full balance by the end of each statement period. Credit card interest rates tend to be higher than other types of debt, such as personal loans and mortgages, so it's imperative not to carry a balance into the next period. It also keeps your credit utilization rate low which can help boost your credit score.
According to J.D. Power's U.S. Credit Card Satisfaction Study from August 2024, just 49% of U.S. cardholders say they pay their balances in full each month.
Credit card companies still make money off deadbeats — also known as "nonrevolvers" and "transactors" — mostly through annual fees and transaction fees paid by merchants.
How to be a credit card deadbeat
For those striving to steer clear of paying interest on their cards, there are a few things to keep in mind.
Look for a no-fee card
There are plenty of cards without annual fees, like the Citi Double Cash® Card. In addition, this card lets you earn 2% cash back on all your purchases with no maximum or limiting categories, 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
The Citi Double Cash® Card is one of the best no-annual-fee cash-back cards thanks to its straightforward rewards structure.
- Balance transfers get a long intro APR
- Generous flat-rate cash-back rewards structure
- No annual fee
- Travelers face a foreign transaction fee
- Intro APR only applies to balance tranfer
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
- Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 17.49% - 27.49%, based on your creditworthiness.
- Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
- If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.
Foreign transaction fee
3%
Another great option for a card with no annual fees is the Capital One Quicksilver Cash Rewards Credit Card, which you can earn a one-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening.
The Capital One Quicksilver Cash Rewards Credit Card has no annual fee, cash-back rewards and a generous intro-APR offer, which make it a great option for saving on interest while earning rewards.
- No annual fee
- Low spending requirement for the welcome bonus
- Redeem cash back for any amount at any time
- No foreign transaction fee
- 3% balance transfer fee during the first 15 months your account is open
- No bonus rewards categories
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a one-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening
- Earn unlimited 1.5% cash back on every purchase, every day
- $0 annual fee and no foreign transaction fees
- Earn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel
- No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won't expire for the life of the account and there's no limit to how much you can earn
- 0% intro APR on purchases and balance transfers for 15 months; 18.49% - 28.49% variable APR after that; balance transfer fee applies
- Top rated mobile app
Balance transfer fee
- 3% for the first 15 months; 4% at a promotional APR that Capital One may offer you at any other time
Only make purchases you can pay for in full when the balance is due
Rewards programs are great but don't be tempted to buy things you don't need or can't afford just to earn a small amount of cash back or other perks. On-time payments are a big factor in your credit score, which will help you unlock some of the best interest rates.
There are several resources available that can help you track and improve your credit score, like Chase's Credit Journey. You don't have to be a Chase customer to use the tool, and it can provide credit score factors, alert you to new activity or changes to your credit report, and offer tips for boosting your credit.
Chase Credit Journey
Cost
Free
Credit bureaus monitored
Experian
Credit scoring model used
VantageScore
Dark web scan
Yes
Identity theft insurance
Yes, up to $1 million
Terms apply.
Set up autopay for your full balance each statement period
Autopay is a great timesaver. Just make sure you have enough funds in the linked account or you could end up with overdraft charges from your bank, as well as late fees from the card issuer. You only need to pay the statement balance, not the full current balance, which will be higher.
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FAQs
Why do banks lend to credit card deadbeats?
Banks may not profit as much from credit card deadbeats compared to more traditional customers, but can still generate revenue from them through annual and transaction fees.
How can I pay off my credit card debt?
People can help pay down their credit card debt in several ways, such as using a balance transfer credit card, opting for a personal loan, or focusing on the highest-interest debt first.
Can paying my credit card increase my credit score?
Paying off your credit card will likely increase your score, especially if you pay the full statement balance. Your payment history is just one factor in your credit score, but it is the largest one.
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