While the term "deadbeat" generally carries a negative connotation, when it comes to the credit card industry, you should consider it 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 $133 billion dollars in credit card interest and fees.
Here's how being a credit card deadbeat can save you money and improve your financial standing.
What we'll cover
- What is a credit card deadbeat?
- How to be a credit card deadbeat
- Bottom line
What is a credit card deadbeat?
Being a credit card deadbeat simply means you pay off your full balance by the end of each statement period. With interest rates rising, not carrying a balance into the next period is particularly important. It also boosts your credit score and keeps yourcredit utilizationrate low.
According to J.D. Power's U.S. Credit Card Satisfaction Study from August 2023, 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 the transaction fees paid by merchants they patronize.
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 still plenty of cards without annual fees, like the Citi Double Cash® Card. In addition, it lets you earn 2% cash back on all your purchases with no maximum or limiting categories.
Citi Double Cash® Card
Rewards
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, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24
Welcome bonus
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.
Annual fee
$0
Intro APR
0% for the first 18 months on balance transfers; N/A for purchases
Regular APR
19.24% - 29.24% variable
Balance transfer fee
For balance transfers completed within 4 months of account opening, an intro balance transfer fee of 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies
Foreign transaction fee
3%
Credit needed
Fair/Good/Excellent
See rates and fees. Terms apply.
Read our Citi Double Cash® Card review.
Another great option for a card with no annual fees is the Capital One Quicksilver Cash Rewards Credit Card, which includes a welcome bonus of $200 after you spend $500 on purchases within 3 months from account opening.
Capital One Quicksilver Cash Rewards Credit Card
Learn More
Rewards
Enjoy up to 6 months of complimentary Uber One membership statement credits through 11/14/2024, 1.5% cash back on every purchase
Welcome bonus
Earn a one-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening
Annual fee
$0
Intro APR
0% intro APR for 15 months on purchases and balance transfers
Regular APR
29.99% variable
Balance transfer fee
3% for the first 15 months; 4% at a promotional APR that Capital One may offer you at any other time
Foreign transaction fee
None
Credit needed
Excellent/Good
Terms apply.
Read our Capital One Quicksilver Cash Rewards Credit Card review.
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 just to earn a small amount of cash back or some other perk.
Set up autopay for your full balance each statement period
Auto-pay 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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Bottom line
While it may not sound like it, being a credit card deadbeat is a good thing: Paying off your balance every month avoids costly interest payments while still giving you access to your card's rewards program.
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