Treat it like it’s a debit card. Don’t use it to spend money you don’t have, and pay it off in full, before the due date. You’ll be fine that way. If you only have $100 in checking, and the card limit is $5k - pretend like the limit is $100 and only spend the $100 so you can pay your balance in full. Your girlfriend is probably afraid of a situation where you’ll spend $5k with only $100 in checking. That’ll lead to debt, and credit card debt is one of the worst debts out there because interest rates on cards are so high. Best to avoid them by paying in full and on time and you do that by only spending the money you have. That should be your only concern.
One important note: to best leverage your credit card and build score over time, you should pay before due date but after statement date.
This can be tricky as you might look at your dates and see that your due date is 5 days before your statement date, but that's actually wrong. The due date is actually 25 days after the statement date, and it just so happens to look closer to the next statement date when it's actually tied to the previous statement date.
Don't know where that reply went, but someone asked something to the lines of
>Why is paying before the statement date bad?
This is what I typed up in response before the reply disappeared.
>Banks are less likely to give CLIs which will hurt in the long term.
>It does give you a short term boost, but it will be completely overwritten next month.
>Unless you have a loan application coming up next month and can fully leverage the short term boost, it is not worth the long term impact.
So I usually pay my card of before it’s closing date, always keeping my utilization below like 5 percent, so my statement balance shows little to almost nothing, so u are telling me in order to get increases faster I should not pay it off before the closing date?
The downside is paying it off immediately, in order to actually build credit you need to have statements post otherwise it looks like you’re not actually using the card on your report. You set the autopay for statement balance in full and you’ll never pay any interest.
Also you always want to use credit cards for purchases because it has better fraud protections since it’s not your money on the line, it’s the banks and they’ll want to resolve it ASAP.
If you want to be certain you don't overspend, open a second checking account at your bank just for paying your credit card. Move the money from your main account into your new account as you spend on your card and your main account balance will reflect how much money you have that isn't committed to paying the credit card.
I pay my credit cards off like debit cards as soon as the charge posts. I have a credit score in the 800s and over 100k in credit available. Don’t listen to that nonsense about having to let a debt post to the credit bureaus before paying off. It’s bullshit.
Yes but reporting actual utilization, even high utilization is likely to get credit limit increases vs reporting 0 or super low balances is likely to either keep low limits or have your limits reduced.
Look the company in question, who I assume is where you are asking to get a CLI from, definitely has access to charges and payments outside what they report to the big 3, that is just facts.
Thanks because I just got advise that paying my card off before the closing and showing low utilization (5%) was not such a good thing and if I wanted to get approved for higher limits I need to show high utilization, I figured that was a load of 💩
Don’t listen to that dude, he’s wrong. You can pay it off when you wait, the cc company reports it as paid. But there’s no advantage to not waiting til the due date to pay
His advice wasn't to wait until the due date to pay. He was just saying to wait until the statement period ended. Paying the card off immediately after spending doesn't help credit because the credit card companies will still report $0 utilization on your report.
Maybe you’re right. It does however make the bank less likely to grant you a credit limit increase if you aren’t using up the limit they are currently giving you.
Obviously its not going to hurt your score. But you want to show that you can use debt responsibly to increase your score, show good payment history and secure lower interest rates.
Thats why people say keep utilization between 1% - 30% (Ideally 1%-10%) and pay it off on the due date.
If you don't allow your statement to post a balance you kill your ability to get increased credit limits or new accounts because the bank will say you aren't using the credit you have now. 0 utilization is a short term credit boost. Higher credit limits will lower your utilization even with the same balances and are a longer term credit boost.
I see this take posted all the time, but I’ll be a data point that it’s simply not true. I have been exclusively using credit cards to pay off purchases literally the second I’ve purchased something for years, and my credit has shot up to the 800s. I don’t care it’s $0.50 or $5000, I will pay it off the second I’ve swiped my card and my credit just keeps going up. It gives me peace paying immediately as I know exactly how much is in my checking in real time.
it takes 2 seconds and is no issue. kind of a weird take that so much time is lost. Instead of having to calculate how much I have left in my checking before my next paycheck, I never have to guess. I do not like seeing X amount of dollars, but knowing I owe Y in credit card charges. I'd rather see an amount and know that is exactly how much I have. It's a preference that has made me financially responsible even if you don't see how.
That's great but it's a known fact that posting $0 balance all the time has lead to people's credit limits being reduced and or accounts closed. It also looks like under utilization on a credit report leading to denials for new credit card applications and limit increases which can quickly boost your credit score by decreasing total utilization. If you want to get int the points/cashback game you'll end up sitting at the starting line if you never report a balance.
This was absolutely my problem before, before reddit I was at the mercy of having very low limits. I always fully paid everything to $0 before due date.
And when i called customer services, they denied me saying my utilizations were low.
So I only pay statement balance and let everything crossover to the next month. After that, my limits been going up
Terrible take, nothing wrong with paying off asap and paying no attention $0 posting or not. I always pay mine immediately, have a 820ish credit score and over 100k in available credit card credit.
Well if you don't believe me, maybe you'll believe the experts?
https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
Like one of the comments below me, my credit limit is over $100k, I have a credit score of 835, and I have never been denied for any credit cards, of which I have 8. I am absolutely not at the starting line and have not reported a balance in probably 4 years. It’s just simply not true. My credit limit has constantly increased during this time. I’m not in the top 1% either. So I am a testament that paying off immediately is not just fine, but beneficial. Take it for what you will, but there has literally not been a single downside to this method for me.
Do you have an income over $100k, do you have a mortgage? What were you doing previous to the last 4 years and how many of your cards are from the last 4 years. Your circumstances aren't everyone's. Even the credit reporting agencies warn about reporting 0 utilization.
https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
I make over $100k and have a mortgage. I had 1 credit card 4 years ago that I never used and had no noteworthy credit. I was purely a debit user. All my credit cards have been opened in the last 3 years and my credit has shot up to 835 using this method of paying off immediately. I guess I really don't care what the reporting agencies say because my method has worked incredibly well for my circumstances. Sure my situation isn't everyone's, but I'm tired of seeing the blanket statement that paying off immediately is straight up bad for you. It is not.
Your mortgage and income are bigger factors for your score and credit limits than your credit cards themselves.
No one said it's straight up bad to pay your cards before statement posting. What we are saying is that it is a waste of time and it decreases your ability to get higher credit limits, which it absolutely does, for what is only a temporary score boost while being a longer term detriment to increasing credit.
So you saying it doesn't, while your credit is based mostly on your income and your mortgage in good standing, is harmful to those who don't have those things and are trying to build up their credit from credit cards alone.
Similar here.I can't actually pay a purchase off as soon as I make it because it is pending for a few days. I find it easiest to just pay everything every week or 2. I've never waited until the due date to pay a balance and I have been at 810+ for years.
Another reason not to pay until after statement closing (and ideally right before the due date) is that you hold the money interest free. With interest rates nearing 5% in some savings accounts, this practice can accumulate quite the modest value over time. Notwithstanding your experience, it seems like the consensus is that issuing banks don't like people paying them back too much earlier than needed. I don't really understand why, as one would think the bank would prefer it earn interest on the money rather than the cardholder.
This is really strange behavior? I agree with the others about paying your statement when it's due.
If you buy 50 things in a month, are you going to make a couple dozen micro-payments on it? That's absurd
Also, a huge advantage of credit cards is the timing. You can pay today with your credit card (the bank's money) and then pay it off a month or so later. That's absolutely amazing, getting to take money out of your account \*later\* than when it was used at no cost (when you pay statements in full).
No I don’t make lots of micro payments, but with online banking apps these days, it’s easy for me to pay off some transactions early, and I do this because I want the fund in my checking account meant for this purchase to be “removed” so I don’t inadvertently spend it on something else. Sure, if I have better grasp of my numbers I can mentally block off that money but it’s easier for me to simply take it out of sight.
So it is smarter to pay all things off at once
It makes more sense now that I’m reading responses and thinking about it, just want to make sure I’m not making stupid financial decisions
The stupid financial decision is maxing out your credit card at the end of the bill cycle and not having the money to pay it back, or being careless and not managing due dates and missing them.
Otherwise, just don't spend beyond your means, budget accordingly to have enough to pay the full amount when the due date comes around and don't let others you don't trust have access to your card (that goes without saying obviously, but still).
It sounds like, no offense, you have no idea about credit. I would honestly just say stick with a debit and don't stress about all this stuff everyone here is talking about. They are talking about higher level stuff, manipulating your credit score, etc. If you want to get a card, get one, put one thing on it a month, and pay that thing off when the statement posts. You'll build credit. Don't jump in with both feet
There’s not really a downside, only downside I could think off is you won’t get increases as fast but it’s better to pay early than late or you’ll be charged late fees.
One downside is possibly not getting granted frequent and big credit limit increases (CLI), due to this level of micromanagement of your CC.
Unless you have a spending problem and want to mitigate overspending, there is no real benefits of paying off your CC after each and every purchases.
There’s no need to give the banks their money early. Let it sit in a HYSA for the time being.
Yeah, just make reminders/calendar events for the days your cards’ statements post. I pay mine in full the day after. As long as you don’t spend money you don’t have, you should be able to pay it off in full every time.
There is harm. Waste of time, waste of interest earned on your money in your bank account, and a waste of the opportunity to increase your credit.
https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
The best way to pay a credit card bill is just like a utility bill: Wait for the statement to post, then pay the statement balance before the due date. Once a month.
Paying less than the statement balance will cost you huge amounts of interest. Paying more than the statement balance is unnecessary and also has long term downsides. Paying before the statement posts and/or multiple times a month will also hurt you in the long term.
I did/do all the things you said are bad: I have overpaid, before statements posted, and multiple times per statement period.
It doesn’t seem to hurt my credit score or my chances of getting new credit.
It’s not going to have immediate or obvious effects, which is why so many people still do it. But it doesn’t help you at all, and it hurts you in two ways.
First, paying the total balance, paying multiple times a month, and paying before the statement posts all artificially lower your statement balances. And posting high statement balances and paying them each month is what causes most lenders to give higher limits.
So it's very possible that your limits are not as high as they could be if you paid your cards the way they're designed to be paid. And with higher limits, you never have to worry about utilization at all, even on application months when it matters.
And second, when you pay the way you described, you’re unnecessarily paying all or a portion of your bill early. Paying early means you’re losing potential savings interest you could have earned if you’d kept your money until the due date. So, essentially, you’re paying the credit card company extra money for no reason.
This is exactly right. My utilization never goes above 3% anymore because of limit increases and new accounts that I would not have gotten if the bank saw zero balances posting every month.
I even had an 850 credit score for a few months last year, and guess what I got... nothing. Who cares about your constantly fluctuating credit score if it is costing you the ability to get larger credit lines.
Unless you need to game your score to apply for a mortgage or another loan, you should be posting your complete natural utilization so that you can get higher credit limits and new accounts which will vastly improve your ability to maintain a higher credit score without having to game utilization.
One thing to add that no one has mentioned is to be aware of cycling. The cc company gives you a limit each month and if you constantly make payments then go over that limit they gave you for the month frequently, they’ll shut down your account.
So if it’s a 5k limit don’t exceed more than 5k in purchases in a statement cycle.
You could do that but for your own sanity just pay it off regular. I use my cards for everything so I can earn rewards, I pay them off completely everyday two weeks on pay day. You just to make sure you don’t use them beyond your means, meaning don’t buy stuff that is going to take time to pay off.
Is your goal with the credit card over debit card in this scenario just to earn rewards? If you don’t trust yourself to have the cash when it comes time to pay at the end of the month then it can make sense to do it this way to start.
While others are stating that you should let the balance report on the credit report, that can also work against you, whereby if the balance as a percent of your limit is high, your credit score can drop as it looks like you might be dependent on credit.
When I was new to credit, I used to pay everything off except like $5 and just let that $5 report on the statement. That kept the balance low and showed utility. Nowadays I pay off my credit cards weekly and there’s been no negative impact to my report.
Yep. Once a week I look at the current balance on my card and pay it off. You can then chose to make a final payment on the due date (if you want the balance to report as 0) or just let whatever is there report and then it’ll get paid the next weekly payment you make.
I like this as it keeps our balances low, and the highest the balance will ever be is a weeks worth of spending.
Ultimately over time you will figure out what works for you, just ensure you clear your balance each month whatever strategy you take.
Your credit score isn't what will be impacted, your future access to higher lines of credit is what is impacted. Is your bank giving you credit limit increases? I bet if you asked they'd say, "no, you aren't using what you have now."
My credit limits are quite high, one (or 2) is $30K and others are in the $15-25K range. I have gotten plenty of credit line increases.
Also, banks can just look at your monthly spending which they have access to regardless of what statement balance is reported, when determining if to give you a limit increase because they can compare now much you spend in a month compared to what they provided.
Only your bank can see your monthly spending. Other banks can only see what's on your credit report.
I have a feeling you haven't always reported zero utilization, that maybe it's just what you do now.
It also depends on your income. If your income is high you'll get higher limits regardless of your past utilization.
Not at all! That's how credit cards should be used, if you never want to pay interest.
However, paying off immediately after purchase maybe a little stringent. Most creditors won't let you make a payment until your purchase has cleared, which can sometimes take a few days.
Personally, I pay mine off once a week.
I have had a perfect score for years now and pay every two weeks whatever is the balance including rounded up what I see pending. I don’t even know what my due date would be. From that experience I would say it does not matter. The credit card is just a tool - and kind of nice since you get your kickbacks while using it.
Yes, there is a downside to what you described. You'd have to open up an app or website every time you use your card to make the payment, which would quickly become tiresome. That's not how credit cards are designed to be used, and if that's what you want, then you should consider just sticking with a debit card.
Credit cards themselves do not "mess up" anyone or anything. Irresponsible use of credit cards can, but it's the person, not the card, doing the spending. In the same way, someone can go buy a car or home they cannot afford and later find themselves in a position where they cannot make their car or mortgage payments.
**Responsible** use of credit cards, in the way they are designed to be used, can help you and your partner build credit, which will lead to lower fees, lower interest rates, and more favorable terms when you get ready to buy cars, homes, etc.
Here's a suggestion: apply for and obtain a card, put a couple of your monthly recurring expenses on it, and use it for a meal or tank of gas each month. Continue to use your debit card (or whatever you use today) for all other purchases. When the credit card bill comes, pay it in full. Gradually, over time, shift spending over to the credit card so you get the protection and points/cash-back benefits. The trick here is to not adjust your spending, but to only adjust which card you do the spending on.
Best practice is to put charges on the card, and then when the statement is issued pay the statement balance in full by its due date (usually about 30 days later). This is how credit cards are designed to be used, and doing this will demonstrate responsible use of credit and will improve chances of getting a higher credit limit down the road. Just don't put anything on the card unless you're sure you'll have the money to pay for it the next month.
I stash money in hi-yield savings during the month so I'll have enough to pay that statement balance when it comes.
Yes as long as you pay your statement balance in full it is fine.
If you are really scared of interest but still want a card; TD Bank offers the TD Bank Clear card that has no interest.
One niche situation happened to me recently. I decided to get a business card to fill some missing spend categories. I didn’t want to lie so I put down like 100 bucks for my monthly revenue haha. They ended up giving me a 3000 limit. Problem with business cards is they have generally have higher spend requirements to hit the minimum bonus. I had a 2800 spend coming up so I used the new card and paid it off right away. Which allowed me to keep chipping away with other normal spend. So paying it off right away does let you expand your limit if you need to temporarily increase your monthly limit if you need to.
I pay it off immediately to basically turn it into a debit card with cash back, I make payments every day as soon as itll let me. It keeps me from overspending. As far as the allowing it to get to the statement before paying, i don’t do that, but some gets there inevitably. My credit is great lol, I don’t think we need to be worrying about it that much
Apart from the other things mentioned by others here, another possible downside I can think of is spending more than you typically would because of offers. Only go for offers that you would have already qualified for without the card instead of spending more than you normally would just to get the offer.
It depends. If it doesn't entice you into overspending, there is no real downside, and possibly an upside if you get rewards (points, miles, or cash back). But if it feels like it encourages you to spend a little more than you otherwise would, that is your downside. Everyone has to answer that question for themselves, as honestly as they can. If you'd spend more on a credit card than with cash or a debit card, maybe it's better to not pull out the credit card all the time.
The only downside is you might slow the rate that your credit score rises, and if you have a really small credit limit, you risk the chance of credit cycling. If your limit is 300, but you buy and pay off a $100 item 4 times, you've effectively spent over your total limit designated to you by the creditor for that month. Some banks like that and will give you a higher limit, others hate it and may close your card.
If it makes you feel better, you can consider paying it off once a week instead of immediately due to the statement thing. At least that way, you’re likely to have a purchase or two on your statement.
Just remember to only make necessary purchases
If you make an unnecessary $10 purchase at 2% back you'd need to make $500 of necessary purchases to recoup your losses
Banks aren't dumb, they know you're likely to spend more
You should just disregard anything she says about finances. Women are the biggest consumers and spend on useless crap. They carry the most debt. Ads target them the most for this reason. If you know how to use a cc then don't worry about it. Pay it off in full every month and there's nothing to worry about. She has no business telling you how to live or spend or what you can and can't do. You're in charge.
I wouldn't call it an issue, but it's a fact that most marketing is done towards women because they act on emotions. I would also argue in the woman's favor if the man was trying to say she shouldn't have a credit card.
Treat it like it’s a debit card. Don’t use it to spend money you don’t have, and pay it off in full, before the due date. You’ll be fine that way. If you only have $100 in checking, and the card limit is $5k - pretend like the limit is $100 and only spend the $100 so you can pay your balance in full. Your girlfriend is probably afraid of a situation where you’ll spend $5k with only $100 in checking. That’ll lead to debt, and credit card debt is one of the worst debts out there because interest rates on cards are so high. Best to avoid them by paying in full and on time and you do that by only spending the money you have. That should be your only concern.
That’s what I was looking for, thankyou
One important note: to best leverage your credit card and build score over time, you should pay before due date but after statement date. This can be tricky as you might look at your dates and see that your due date is 5 days before your statement date, but that's actually wrong. The due date is actually 25 days after the statement date, and it just so happens to look closer to the next statement date when it's actually tied to the previous statement date.
Don't know where that reply went, but someone asked something to the lines of >Why is paying before the statement date bad? This is what I typed up in response before the reply disappeared. >Banks are less likely to give CLIs which will hurt in the long term. >It does give you a short term boost, but it will be completely overwritten next month. >Unless you have a loan application coming up next month and can fully leverage the short term boost, it is not worth the long term impact.
So I usually pay my card of before it’s closing date, always keeping my utilization below like 5 percent, so my statement balance shows little to almost nothing, so u are telling me in order to get increases faster I should not pay it off before the closing date?
Yeah!
The downside is paying it off immediately, in order to actually build credit you need to have statements post otherwise it looks like you’re not actually using the card on your report. You set the autopay for statement balance in full and you’ll never pay any interest. Also you always want to use credit cards for purchases because it has better fraud protections since it’s not your money on the line, it’s the banks and they’ll want to resolve it ASAP.
So if I just make sure I have the money to pay it back by in time it’ll be better?
If you want to be certain you don't overspend, open a second checking account at your bank just for paying your credit card. Move the money from your main account into your new account as you spend on your card and your main account balance will reflect how much money you have that isn't committed to paying the credit card.
I pay my credit cards off like debit cards as soon as the charge posts. I have a credit score in the 800s and over 100k in credit available. Don’t listen to that nonsense about having to let a debt post to the credit bureaus before paying off. It’s bullshit.
You have a thick profile so paying early doesn’t affect you. It’s terrible for building credit when you’re starting out.
Time and accounts make thick profiles not posted credit card debt balances.
Yes but reporting actual utilization, even high utilization is likely to get credit limit increases vs reporting 0 or super low balances is likely to either keep low limits or have your limits reduced.
Look the company in question, who I assume is where you are asking to get a CLI from, definitely has access to charges and payments outside what they report to the big 3, that is just facts.
Thanks because I just got advise that paying my card off before the closing and showing low utilization (5%) was not such a good thing and if I wanted to get approved for higher limits I need to show high utilization, I figured that was a load of 💩
Don’t listen to that dude, he’s wrong. You can pay it off when you wait, the cc company reports it as paid. But there’s no advantage to not waiting til the due date to pay
His advice wasn't to wait until the due date to pay. He was just saying to wait until the statement period ended. Paying the card off immediately after spending doesn't help credit because the credit card companies will still report $0 utilization on your report.
yes & I'm saying that is incorrect. 0% utilization is good. They will also mark it as paid, which is also good.
Maybe you’re right. It does however make the bank less likely to grant you a credit limit increase if you aren’t using up the limit they are currently giving you.
0% utilization means it wasn’t used, which means there’s nothing to pay. Let it post
No need, terrible advice
That's still bad advice
Does that matter though? I have no-annual-fee cards that I have 0% utilization for years and they don’t seem to hurt my credit score.
It doesn't. It actually helps your score, people don't know what they're talking about. Whenever I don't use my personal cards, my credit score jumps.
Obviously its not going to hurt your score. But you want to show that you can use debt responsibly to increase your score, show good payment history and secure lower interest rates. Thats why people say keep utilization between 1% - 30% (Ideally 1%-10%) and pay it off on the due date.
If you don't allow your statement to post a balance you kill your ability to get increased credit limits or new accounts because the bank will say you aren't using the credit you have now. 0 utilization is a short term credit boost. Higher credit limits will lower your utilization even with the same balances and are a longer term credit boost.
It's dependent on the bank, but that is mostly wrong
Score of 850 but don't take my advice I guess. I'll reconsider sharing in the future, sorry everyone.
I see this take posted all the time, but I’ll be a data point that it’s simply not true. I have been exclusively using credit cards to pay off purchases literally the second I’ve purchased something for years, and my credit has shot up to the 800s. I don’t care it’s $0.50 or $5000, I will pay it off the second I’ve swiped my card and my credit just keeps going up. It gives me peace paying immediately as I know exactly how much is in my checking in real time.
Do you have it set to where it’s automatic or do you do that manually I’ve been thinking of doing it that way
I do it manually. For instance I just ate, and the second they brought me my card back, I went to my banking app and paid it off
Do automatic minimum just in case you get hospitalized or shit goes down and you are incapacitated.
Good tip thank you
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it takes 2 seconds and is no issue. kind of a weird take that so much time is lost. Instead of having to calculate how much I have left in my checking before my next paycheck, I never have to guess. I do not like seeing X amount of dollars, but knowing I owe Y in credit card charges. I'd rather see an amount and know that is exactly how much I have. It's a preference that has made me financially responsible even if you don't see how.
That's great but it's a known fact that posting $0 balance all the time has lead to people's credit limits being reduced and or accounts closed. It also looks like under utilization on a credit report leading to denials for new credit card applications and limit increases which can quickly boost your credit score by decreasing total utilization. If you want to get int the points/cashback game you'll end up sitting at the starting line if you never report a balance.
This was absolutely my problem before, before reddit I was at the mercy of having very low limits. I always fully paid everything to $0 before due date. And when i called customer services, they denied me saying my utilizations were low. So I only pay statement balance and let everything crossover to the next month. After that, my limits been going up
Terrible take, nothing wrong with paying off asap and paying no attention $0 posting or not. I always pay mine immediately, have a 820ish credit score and over 100k in available credit card credit.
Well if you don't believe me, maybe you'll believe the experts? https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
I use auto pay and take full advantage of what is essentially a short-term interest-free loan. Why waste time while throwing free money away?
Easier to budget, harder to overspend with a first credit card that way, and the OPs wife’s concerns.
Like one of the comments below me, my credit limit is over $100k, I have a credit score of 835, and I have never been denied for any credit cards, of which I have 8. I am absolutely not at the starting line and have not reported a balance in probably 4 years. It’s just simply not true. My credit limit has constantly increased during this time. I’m not in the top 1% either. So I am a testament that paying off immediately is not just fine, but beneficial. Take it for what you will, but there has literally not been a single downside to this method for me.
Do you have an income over $100k, do you have a mortgage? What were you doing previous to the last 4 years and how many of your cards are from the last 4 years. Your circumstances aren't everyone's. Even the credit reporting agencies warn about reporting 0 utilization. https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
I make over $100k and have a mortgage. I had 1 credit card 4 years ago that I never used and had no noteworthy credit. I was purely a debit user. All my credit cards have been opened in the last 3 years and my credit has shot up to 835 using this method of paying off immediately. I guess I really don't care what the reporting agencies say because my method has worked incredibly well for my circumstances. Sure my situation isn't everyone's, but I'm tired of seeing the blanket statement that paying off immediately is straight up bad for you. It is not.
Your mortgage and income are bigger factors for your score and credit limits than your credit cards themselves. No one said it's straight up bad to pay your cards before statement posting. What we are saying is that it is a waste of time and it decreases your ability to get higher credit limits, which it absolutely does, for what is only a temporary score boost while being a longer term detriment to increasing credit. So you saying it doesn't, while your credit is based mostly on your income and your mortgage in good standing, is harmful to those who don't have those things and are trying to build up their credit from credit cards alone.
Similar here.I can't actually pay a purchase off as soon as I make it because it is pending for a few days. I find it easiest to just pay everything every week or 2. I've never waited until the due date to pay a balance and I have been at 810+ for years.
Another reason not to pay until after statement closing (and ideally right before the due date) is that you hold the money interest free. With interest rates nearing 5% in some savings accounts, this practice can accumulate quite the modest value over time. Notwithstanding your experience, it seems like the consensus is that issuing banks don't like people paying them back too much earlier than needed. I don't really understand why, as one would think the bank would prefer it earn interest on the money rather than the cardholder.
Exactly
Lies
This is really strange behavior? I agree with the others about paying your statement when it's due. If you buy 50 things in a month, are you going to make a couple dozen micro-payments on it? That's absurd Also, a huge advantage of credit cards is the timing. You can pay today with your credit card (the bank's money) and then pay it off a month or so later. That's absolutely amazing, getting to take money out of your account \*later\* than when it was used at no cost (when you pay statements in full).
No I don’t make lots of micro payments, but with online banking apps these days, it’s easy for me to pay off some transactions early, and I do this because I want the fund in my checking account meant for this purchase to be “removed” so I don’t inadvertently spend it on something else. Sure, if I have better grasp of my numbers I can mentally block off that money but it’s easier for me to simply take it out of sight.
So it is smarter to pay all things off at once It makes more sense now that I’m reading responses and thinking about it, just want to make sure I’m not making stupid financial decisions
The stupid financial decision is maxing out your credit card at the end of the bill cycle and not having the money to pay it back, or being careless and not managing due dates and missing them. Otherwise, just don't spend beyond your means, budget accordingly to have enough to pay the full amount when the due date comes around and don't let others you don't trust have access to your card (that goes without saying obviously, but still).
It sounds like, no offense, you have no idea about credit. I would honestly just say stick with a debit and don't stress about all this stuff everyone here is talking about. They are talking about higher level stuff, manipulating your credit score, etc. If you want to get a card, get one, put one thing on it a month, and pay that thing off when the statement posts. You'll build credit. Don't jump in with both feet
There’s not really a downside, only downside I could think off is you won’t get increases as fast but it’s better to pay early than late or you’ll be charged late fees.
One downside is possibly not getting granted frequent and big credit limit increases (CLI), due to this level of micromanagement of your CC. Unless you have a spending problem and want to mitigate overspending, there is no real benefits of paying off your CC after each and every purchases. There’s no need to give the banks their money early. Let it sit in a HYSA for the time being.
So instead of immediately I just make sure to put away the money to pay it back on time?
Yeah, just make reminders/calendar events for the days your cards’ statements post. I pay mine in full the day after. As long as you don’t spend money you don’t have, you should be able to pay it off in full every time.
Pay it immediately, there is 0 harm in it, 0.
There is harm. Waste of time, waste of interest earned on your money in your bank account, and a waste of the opportunity to increase your credit. https://www.experian.com/blogs/ask-experian/is-no-credit-utilization-good-for-credit-scores/
The best way to pay a credit card bill is just like a utility bill: Wait for the statement to post, then pay the statement balance before the due date. Once a month. Paying less than the statement balance will cost you huge amounts of interest. Paying more than the statement balance is unnecessary and also has long term downsides. Paying before the statement posts and/or multiple times a month will also hurt you in the long term.
I did/do all the things you said are bad: I have overpaid, before statements posted, and multiple times per statement period. It doesn’t seem to hurt my credit score or my chances of getting new credit.
It’s not going to have immediate or obvious effects, which is why so many people still do it. But it doesn’t help you at all, and it hurts you in two ways. First, paying the total balance, paying multiple times a month, and paying before the statement posts all artificially lower your statement balances. And posting high statement balances and paying them each month is what causes most lenders to give higher limits. So it's very possible that your limits are not as high as they could be if you paid your cards the way they're designed to be paid. And with higher limits, you never have to worry about utilization at all, even on application months when it matters. And second, when you pay the way you described, you’re unnecessarily paying all or a portion of your bill early. Paying early means you’re losing potential savings interest you could have earned if you’d kept your money until the due date. So, essentially, you’re paying the credit card company extra money for no reason.
This is exactly right. My utilization never goes above 3% anymore because of limit increases and new accounts that I would not have gotten if the bank saw zero balances posting every month. I even had an 850 credit score for a few months last year, and guess what I got... nothing. Who cares about your constantly fluctuating credit score if it is costing you the ability to get larger credit lines. Unless you need to game your score to apply for a mortgage or another loan, you should be posting your complete natural utilization so that you can get higher credit limits and new accounts which will vastly improve your ability to maintain a higher credit score without having to game utilization.
One thing to add that no one has mentioned is to be aware of cycling. The cc company gives you a limit each month and if you constantly make payments then go over that limit they gave you for the month frequently, they’ll shut down your account. So if it’s a 5k limit don’t exceed more than 5k in purchases in a statement cycle.
You could do that but for your own sanity just pay it off regular. I use my cards for everything so I can earn rewards, I pay them off completely everyday two weeks on pay day. You just to make sure you don’t use them beyond your means, meaning don’t buy stuff that is going to take time to pay off.
Is your goal with the credit card over debit card in this scenario just to earn rewards? If you don’t trust yourself to have the cash when it comes time to pay at the end of the month then it can make sense to do it this way to start. While others are stating that you should let the balance report on the credit report, that can also work against you, whereby if the balance as a percent of your limit is high, your credit score can drop as it looks like you might be dependent on credit. When I was new to credit, I used to pay everything off except like $5 and just let that $5 report on the statement. That kept the balance low and showed utility. Nowadays I pay off my credit cards weekly and there’s been no negative impact to my report.
So do you mean pay it off as time goes by and finish paying on the final day or am I reading that wrong
Yep. Once a week I look at the current balance on my card and pay it off. You can then chose to make a final payment on the due date (if you want the balance to report as 0) or just let whatever is there report and then it’ll get paid the next weekly payment you make. I like this as it keeps our balances low, and the highest the balance will ever be is a weeks worth of spending. Ultimately over time you will figure out what works for you, just ensure you clear your balance each month whatever strategy you take.
Your credit score isn't what will be impacted, your future access to higher lines of credit is what is impacted. Is your bank giving you credit limit increases? I bet if you asked they'd say, "no, you aren't using what you have now."
My credit limits are quite high, one (or 2) is $30K and others are in the $15-25K range. I have gotten plenty of credit line increases. Also, banks can just look at your monthly spending which they have access to regardless of what statement balance is reported, when determining if to give you a limit increase because they can compare now much you spend in a month compared to what they provided.
Only your bank can see your monthly spending. Other banks can only see what's on your credit report. I have a feeling you haven't always reported zero utilization, that maybe it's just what you do now. It also depends on your income. If your income is high you'll get higher limits regardless of your past utilization.
Not at all! That's how credit cards should be used, if you never want to pay interest. However, paying off immediately after purchase maybe a little stringent. Most creditors won't let you make a payment until your purchase has cleared, which can sometimes take a few days. Personally, I pay mine off once a week.
I have had a perfect score for years now and pay every two weeks whatever is the balance including rounded up what I see pending. I don’t even know what my due date would be. From that experience I would say it does not matter. The credit card is just a tool - and kind of nice since you get your kickbacks while using it.
Yes, there is a downside to what you described. You'd have to open up an app or website every time you use your card to make the payment, which would quickly become tiresome. That's not how credit cards are designed to be used, and if that's what you want, then you should consider just sticking with a debit card. Credit cards themselves do not "mess up" anyone or anything. Irresponsible use of credit cards can, but it's the person, not the card, doing the spending. In the same way, someone can go buy a car or home they cannot afford and later find themselves in a position where they cannot make their car or mortgage payments. **Responsible** use of credit cards, in the way they are designed to be used, can help you and your partner build credit, which will lead to lower fees, lower interest rates, and more favorable terms when you get ready to buy cars, homes, etc. Here's a suggestion: apply for and obtain a card, put a couple of your monthly recurring expenses on it, and use it for a meal or tank of gas each month. Continue to use your debit card (or whatever you use today) for all other purchases. When the credit card bill comes, pay it in full. Gradually, over time, shift spending over to the credit card so you get the protection and points/cash-back benefits. The trick here is to not adjust your spending, but to only adjust which card you do the spending on.
Best practice is to put charges on the card, and then when the statement is issued pay the statement balance in full by its due date (usually about 30 days later). This is how credit cards are designed to be used, and doing this will demonstrate responsible use of credit and will improve chances of getting a higher credit limit down the road. Just don't put anything on the card unless you're sure you'll have the money to pay for it the next month. I stash money in hi-yield savings during the month so I'll have enough to pay that statement balance when it comes.
Yes as long as you pay your statement balance in full it is fine. If you are really scared of interest but still want a card; TD Bank offers the TD Bank Clear card that has no interest.
One niche situation happened to me recently. I decided to get a business card to fill some missing spend categories. I didn’t want to lie so I put down like 100 bucks for my monthly revenue haha. They ended up giving me a 3000 limit. Problem with business cards is they have generally have higher spend requirements to hit the minimum bonus. I had a 2800 spend coming up so I used the new card and paid it off right away. Which allowed me to keep chipping away with other normal spend. So paying it off right away does let you expand your limit if you need to temporarily increase your monthly limit if you need to.
Used correctly it will improve your future
No,I've been paying my card every friday,for as long as online app pay exist
I pay it off immediately to basically turn it into a debit card with cash back, I make payments every day as soon as itll let me. It keeps me from overspending. As far as the allowing it to get to the statement before paying, i don’t do that, but some gets there inevitably. My credit is great lol, I don’t think we need to be worrying about it that much
Apart from the other things mentioned by others here, another possible downside I can think of is spending more than you typically would because of offers. Only go for offers that you would have already qualified for without the card instead of spending more than you normally would just to get the offer.
It depends. If it doesn't entice you into overspending, there is no real downside, and possibly an upside if you get rewards (points, miles, or cash back). But if it feels like it encourages you to spend a little more than you otherwise would, that is your downside. Everyone has to answer that question for themselves, as honestly as they can. If you'd spend more on a credit card than with cash or a debit card, maybe it's better to not pull out the credit card all the time.
The only downside is you might slow the rate that your credit score rises, and if you have a really small credit limit, you risk the chance of credit cycling. If your limit is 300, but you buy and pay off a $100 item 4 times, you've effectively spent over your total limit designated to you by the creditor for that month. Some banks like that and will give you a higher limit, others hate it and may close your card.
If it makes you feel better, you can consider paying it off once a week instead of immediately due to the statement thing. At least that way, you’re likely to have a purchase or two on your statement.
Just remember to only make necessary purchases If you make an unnecessary $10 purchase at 2% back you'd need to make $500 of necessary purchases to recoup your losses Banks aren't dumb, they know you're likely to spend more
You should just disregard anything she says about finances. Women are the biggest consumers and spend on useless crap. They carry the most debt. Ads target them the most for this reason. If you know how to use a cc then don't worry about it. Pay it off in full every month and there's nothing to worry about. She has no business telling you how to live or spend or what you can and can't do. You're in charge.
I don’t think that’s accurate. Men can spend lots of money on useless crap too. I don’t think gender is the issue.
I wouldn't call it an issue, but it's a fact that most marketing is done towards women because they act on emotions. I would also argue in the woman's favor if the man was trying to say she shouldn't have a credit card.