Will a credit card issuer cancel an account if it never incurs interest?
While technically true, a card issuer can cancel your card for almost any reason they want, it's highly unlikely they'll cancel it because you pay your bills! There are many, many people out there that pay their bills in full every month without ever paying a cent in credit card interest. I wouldn't ever purposefully incur any interest on a credit card. Related anecdote: I used to have a credit card that I only used for gas purchases because they gave 5% off for fuel. The issuer eventually discontinued the program (I assume because people like me took advantage of it.) So while they didn't cancel my card, the bonus eventually went away. I miss that card. My conclusion: if you can take advantage of promotional rates, by all means, go for it. You don't owe them any favors. Enjoy it as long as it lasts. Remember, the card company gets a percentage at the time of purchase, as well as any interest you let them collect from you. Yes, they're still making a profit on our accounts, and they can always hope that at some point we'll run up a high enough bill to be willing to pay some interest. They may kill completely inactive cards, since they need a bit of income to pay for processing the account. But if you're actively using it, they aren't very likely to tell you to go away (though they may change which plan(s) they offer you). Credit card companies are businesses. Businesses will make any decision that makes them money. So does it make them money to cancel your account? It's a simple cost-benefit analysis: you having an account with them will probably give them some benefit for very little cost to them. The only real cost associated with an open account is someone who uses the card but doesn't pay, but they're pretty sure you won't be doing that. "I would think it extremely unlikely that an issuer would cancel your card for having an ADB of approximately zero. The issuer charges the vendor that accepts a card a percentage of the transaction (usually up to ~3%, AMEX is generally higher) - so they are making money even if you carry no balance on your card (the specific language for various vendor-side (acceptor) credit card agreements boils down to ""we are essentially giving you, the vendor, a short-term loan and you will pay us for it). This why you see credit-card minimum purchase amounts at places like hot-dog stands - they're getting nailed on the percentage.  This is also why, when given the choice between ""Debit or Credit"" for a particular card, I choose where to put the hit on the company I like less - the retailer or the bank." "Speaking from personal experience: I have had a credit card canceled for exactly this reason. It's happened to me three times, with two different providers (NatWest and Nationwide). After the third instance I stopped bothering to even carry a credit card. It's worth noting that all three were ""free"" cards in the sense that I paid no flat fee or subscription to get the cards. The only way the issuer could make a profit on them was through interest. I was also not a frequent user, carrying the card for convenience more than anything else, although I did make purchases on all three. So it's certainly a possibility. But I live in the UK and I'm guessing most of your other respondents do not. It may be a practice that's more common here than in the US. That might even explain the origin of the rumour." Technically, yes but, in practice, no.  I use a card for everything and pay it off every month. Sometimes, several times a month depending on how the month is going. In the last 10 years, I've paid a total of $8 in interest because I legitimately forgot to pay my balance before the statement came out when I was out of town. I wasn't late, I just didn't beat the statement and had a small interest charge that I couldn't successfully argue off.  In the same time period, I've had one card cancelled at the banks request. The reason was that I hadn't used it in two years so they cancelled me.  I never pay annual fees, I get cards with great rewards programs and I (almost) never pay interest. If your bank cancels your card because you're too responsible, find a better bank. "When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are ""buying in bulk"" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer ""convenience checks"" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television." No, they won't cancel it because you pay your card on time.  When a company offers a promotion like that they are banking on making money on average, not in every case.  On average including all the benefits including transaction fees, deals for partnering with best buy, etc.  Of course some people pay their credit card in full each month and never incur interest charges.  However, credit card companies more than cover that with other people who aren't responsible.  If it wasn't worth while they would end the card program or change it. Credit card merchant fees are $0.15 - $0.40 per transaction plus 1.5-4% of the amount charged. Card issuers are competing to get to be the card in your pocket that you use on a daily basis. If you were a card issuer, wouldn't you like to get 1.5-4% of every transaction I make for the rest of my life? As a side note, ever since I became a business owner and saw how much we are all paying for credit card merchant fees, I've patronized a lot more cash-only businesses. The best ones pass the savings directly on to the consumer. Some years ago a call center operator told me a bit more than they probably should have.  They like to see a lot of money go through the card, but very little staying on the card. Yes, they make money on the interest but one card defaulting blows away the profit on a lot of other cards. The 3% take from the merchants is both reliable and up-front, not 6 months down the line when (and if) you pay the interest. So if you want to make your credit card company happy, pay your bills in full every month. I have credit far beyond my actual means because I run work expenses on my personal card, I was told they didn't care (and had already guessed) that it wasn't my money. The point was I was handling things in a way they liked. Not quite at Palladium status, but cards with $200 annual fees are mine for the asking, and I haven't paid interest since the early 1990's. I've got a card that I've had for about 25 years now.  The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it.  No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use.
"Yes, merchants may charge a fee for using a credit card. For a credit card transaction, interchange fees flow from the merchant to the card issuer. This is why Australians are seeing a boom in ""Debit"" MasterCard/VISA cards - the issuing banks make income when you select ""Credit"".  These costs can be passed from the merchant to the customer as a ""Credit Card Fee"". For an EFTPOS transaction, the interchange flows the other way, from the card issuer to the acquiring bank (The merchant's bank).  As an aside, the setup of these fees is why some large supermarket chains in Australia restrict you from selecting ""Credit"" with a scheme debit card (MasterCard and VISA are 'schemes').  They are 'acquirers' in the payments networks and they make interchange fees when you hit ""Savings"" and pay if you hit ""Credit"" - therefore where you can hit either ""Credit"" or ""Savings"" they prefer (and may force) you to press ""Savings""." I have money withdrawn near when the bill is due (not early at all) and my credit score is top-notch.  It's far, far more important that you don't pay late.  I don't think paying early earns you brownie points with FICO. Now, if you have an interest-bearing checking account, and if you pay your balance in full each month, and are very, very organized, then paying at the last minute, but on time, lets you take full advantage of the free float that the credit card issuer gives you. If you have trouble rubbing two brain cells together when it comes to bills (like I do sometimes) then either set up auto-deduct from your checking account or pay the bill as soon as it comes in. "Credit cards have three important advantages. None of them are for day-to-day borrowing of money. Safety - Credit cards have better fraud protection than checks or cash, and better than most debit/check cards. If you buy something with a credit card, you also get the issuer's (think Visa) assurances that your will get the product you paid for, or your money back. At almost any time, if a product you buy is not what you expect, you can work with the issuer, even if the store says ""screw you"". Security - Credit cards are almost universally accepted as a ""security"" against damages to the vendor. Hotels, car rentals, boat rentals etc. will accept a credit card as a means of securing their interests. Without that, you may have to make huge deposits, or not be able to rent at all. For example, in my area (touristy) you can not rent a car on debit or cash. You must use a credit card. Around here most hotel rooms require a credit card as well. This is different from area to area, but credit cards are nearly universally accepted. Emergencies - If you're using your credit card properly, then you have some extra padding when stuff goes wrong. For example, it may be cheaper to place a bill on a credit card for a couple months while you recover from a car accident, than to deplete your bank account and have to pay fees. Bonus - Some cards have perks, like miles, points, or cash back. Some can be very beneficial. You need to be careful about the rules with these bonuses. For example, some cards only give you points if you carry a balance. Some only give miles if you shop at certain stores. But if you have a good one, these can be pretty fantastic. A 3% cash back on purchases can make a large difference over time." "You should probably call the travel agency and complain. Not that they will care, but if by any chance they do - they can ask PayPal to remove the block. This is what is called ""authorization pending"". Usually, a credit card transaction has two stages: The merchant requests its payment processor to authorize the transaction. The processor will contact the card issuer with the transaction details and will get the authorization code which will be passed to the merchant. At that stage the transaction enters the ""pending"" stage on your account. The merchant submits the transaction and gets the money from its payment processor, who forwards the transaction to the card issuer and gets the money from there. The card issuer charges the card owner. The transaction should have the same authorization code received in step #1, and by matching it to the pending transaction, the card issuer removes the pending transaction, and posts the actual transaction. However, if the transaction in step #2 doesn't include the code from step #1, the match doesn't occur and you see the situation you have now: both the actual transaction and the pending are active. In this case the merchant should contact its merchant processor and request the revocation of the authorization code. The processor will then forward the request to the card issuer, who will then remove the pending transaction. As you can see - multiple parties have to actually care for that to happen, and many times they don't, because they don't have to. As to the period - it's up to the card issuer (PayPal in your case), but 1 month is a very long time. Usually it's about a week or two, unless it's a hotel/car rental. In any case - once it expires, it will go away on its own and if you don't mind for the amounts to be blocked until then - just let it expire. The fact that you used a debit card for this transaction is irrelevant. Unless it was a pin transaction, debit card transactions are processed as credit card transactions by processors. For pin transactions, there process is different and you shouldn't see doubles. If it was a pin transaction - contact PayPal and check with them what's going on. Generally, PayPal is not to be used as a ""bank account"", it is merely a payment processor, and it is advised to remove the money from there as soon as possible." If you've agreed to pay the money, then you owe them whether they have a valid credit card number of yours or not. If they want to report your debt to a collections agency and/or credit bureau, they can. Which would suck for you. It may not be that likely over $9.99 or whatever, but my point is that it's still a small risk even with a temporary card number. While C/C's have 0% interest this a good mechanism to manage debt. But they expect you will pile up a large debt and at then of the interest free period you will get hammered. So plan your exit strategy.  Plan to pay off the 0% cards at the end of the int free period and pay the other cards down. Alternatively, What you could do is pay off the other cards now by drawing down on the 0% card if its possible. Then.all your debt is at 0% int. Also you are consolidating your debt into 1 account. When the int free period is over move the debt into a single personal loan if you don't plan on paying it all off immrdiatley In the meantime put you savings into an interest bearing account to maximize the value of your savings. In my experience dealing with credit cards and store cards, you may find that the store card is much more flexible than the credit card in terms of the enforcement of the card agreement.  For instance, I've missed payments on credit cards and only been 1 day late and saw a rate increase, but on a store card when the same thing happened, it was like they didn't even notice.  Granted, this was a 100% store card with no VISA/MC logo on it, and it was through their bank. This may not be true of all store cards and your experience may differ, but I felt like the store card was more of a tool for acquiring the merchandise and helping the store make a sale than it was for some big bank to make money off of my interest. With credit cards, you are the product, and the bank makes money purely from interest. The store, on the other hand, makes money from selling the product, and credit helps increase sales. My suggestion is to avoid credit altogether as all debt is risk, but if you must use credit, you may have a better experience with the store card. Of course, don't forget to consider the interest rates, payment plan, and other fees that may apply as they may affect your decision in terms of which to go with. Things are generally fine.  A credit balance is not a horrible thing.   The argument against maintaining a credit balance is that you are essentially loaning the credit card issuer money at 0% interest.  You probably have alternative investments that would pay better interest, so it's usually better to park your money there.  All that said, it's unlikely that the interest on whatever balance you have is enough to be more than pennies.   The way that a credit card works, you run up a balance in one period.  Then there is a grace period.  If you don't pay off the balance during the grace period, they start charging you interest.  You also may have a minimum payment to make.  If you don't make that payment, they'll charge you a late fee.   The typical period to rack up charges is from the first to the last day of a month.  The typical grace period is through the 20th or 25th of the next month.  Your card may be different.  So check the documentation (user agreement) for your card if you want the real data.   It sounds like you paid off some purchases while you were still in the period where you rack up charges.  While those purchases were posted to the account, they may not be counted in the balance calculation.  If your credit balance exactly matches the payment you made, that's probably what happened.  It's also possible that you overpaid the balance.  If your credit balance is just a small amount, that's probably what happened.   If you really want to be sure, you should call the credit card issuer and ask them.  At best we can tell you how it normally works.  Since this is your first month, you could just wait for your first bill and respond to that.  So long as you pay off the entire balance shown there by the deadline, everything should be fine.   Don't wait until the last day to pay.  It's usually best to pay a week or so early so as to leave time for the mail to deliver the check and for them to process it.  You can wait longer for an online payment, but a few business days early to give you a chance to handle potential problems is still good.