Is it good to pay credit card bill early?

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zakp91
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Is it good to pay credit card bill early?

Postby zakp91 » Wed Jul 31, 2013 11:28 am

Hello!

I am new to the whole credit card world so I thought that I would get some advice here about whether or not I should pay my bill early.

Let's say that my statement period closes August 10th. I was told that my first due date for that statement is September 10th. Would it be bad to make my first payment August 11th or anytime before before September 10th for that matter?

Also, I don't understand why my payment due date is a month after my statement period closes. Can someone offer me a little bit of knowledge?


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nismoZtuner
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Postby nismoZtuner » Wed Jul 31, 2013 3:12 pm

zakp91 wrote:Let's say that my statement period closes August 10th. I was told that my first due date for that statement is September 10th. Would it be bad to make my first payment August 11th or anytime before before September 10th for that matter?


Welcome to the forums :)

For me I pay my entire amount due before the closing date.
for example my american express card is due every 24th of the month- I usually pay it all off a day before the closing date (23rd) or bit by bit before the actual closing date that way i dont carry a balance..

one time i paid one of my credit cards on the due date about 3 hours before it was going to be the next day. I was charged a late fee -_-

So now i pay 1 day before the closing date on all my cards just as a precaution ...

and yes you can pay the small amounts throughout the month.. not just on the due date. you can buy something today and pay it off in 2-3 days whenever you want.. just make sure to not pass the due date..
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MemberSince99
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Postby MemberSince99 » Wed Jul 31, 2013 3:20 pm

The payment due date by law has to give you so many days after your statement closes to allow you to pay. It's what is called the "Grace Period" in which if you pay in full the balance due, you will incur no interest charges. But this is a requirement by law that lenders must follow.

There are exceptions of course. For example, cash advances is one.

It's not bad to pay early I know of no lender who dislikes getting paid from personal experience. Me, I pay my balances as soon as they post (and I take the time to look over the activity to make sure I did it and the amount is correct too). Saves me having to do a boatload of them later and try to refresh my memory of what I did.

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Postby zakp91 » Wed Jul 31, 2013 3:50 pm

If I do pay as soon as my item posts. How does this affect my credit utilization rate? For example, if my CL is $100 and I put a $50 charge and do not use it at all during that statement period, but I pay $40 well before my statement period ends (leaving my balance to $10 for the end of my statement period), will my utilization rate look like 50% or 10%? I'm sorry if that question is confusing!

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Postby Z06Biker » Wed Jul 31, 2013 3:57 pm

MemberSince99 wrote:The payment due date by law has to give you so many days after your statement closes to allow you to pay. It's what is called the "Grace Period" in which if you pay in full the balance due, you will incur no interest charges. But this is a requirement by law that lenders must follow.

There are exceptions of course. For example, cash advances is one.

It's not bad to pay early I know of no lender who dislikes getting paid from personal experience. Me, I pay my balances as soon as they post (and I take the time to look over the activity to make sure I did it and the amount is correct too). Saves me having to do a boatload of them later and try to refresh my memory of what I did.


In general, the earlier the better. Hell, I sometimes pay off my outstanding balances several times a month. Member99, I know you'd agree with me here, considering the recent Amex annoyance you went through... ;)
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Postby djrez4 » Wed Jul 31, 2013 7:00 pm

I'm going to go against conventional wisdom here. The only reason you should pay before your due date is if you want a FICO boost for upcoming applications for credit.

If your primary concern is a high FICO for that specific period, sure: pay everything early and let a small balance report on one card. Otherwise, keep your money and earn interest on it until your due date. No reason to shift that interest to the credit card company.

Read this. Amex actually got sued because they mislead people into paying early and raked in hundreds of millions of extra dollars because of it.
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Postby MemberSince99 » Wed Jul 31, 2013 7:11 pm

Be careful or you will get AmEx Bear all riled up.

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Postby takeshi » Thu Aug 01, 2013 10:50 am

zakp91 wrote:Let's say that my statement period closes August 10th. I was told that my first due date for that statement is September 10th. Would it be bad to make my first payment August 11th or anytime before before September 10th for that matter?

Good and bad are going to vary depending on one's specific goals and priorities -- same as with any topic. If you're looking to maximize interest on your cash then it might make sense to pay on the due date. Many do pay before the due date for various reasons. If you're looking to reduce reported utilization then you'll want to make payments before the statement cuts.

zakp91 wrote:If I do pay as soon as my item posts. How does this affect my credit utilization rate? For example, if my CL is $100 and I put a $50 charge and do not use it at all during that statement period, but I pay $40 well before my statement period ends (leaving my balance to $10 for the end of my statement period), will my utilization rate look like 50% or 10%? I'm sorry if that question is confusing!

The balance when the statement cuts is what is reported. In your example the balance at statement period end would be $10. $10 balance / $100 limit = 10% utilization.

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Postby zakp91 » Thu Aug 01, 2013 12:58 pm

takeshi wrote:Good and bad are going to vary depending on one's specific goals and priorities -- same as with any topic. If you're looking to maximize interest on your cash then it might make sense to pay on the due date. Many do pay before the due date for various reasons. If you're looking to reduce reported utilization then you'll want to make payments before the statement cuts.


My main goal is to improve my credit score. What are the benefits of maximizing my interest?


takeshi wrote:The balance when the statement cuts is what is reported. In your example the balance at statement period end would be $10. $10 balance / $100 limit = 10% utilization.


Thank you very much! This is so helpful.

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Postby imaltesers » Sat Aug 03, 2013 6:24 pm

Hi, I have a related question. I plan on getting the Chase Freedom soon, and I want to charge all my spending on it so I can take advantage of the cashback. But I also want to keep a low credit utilization ratio. So would it work if I just pay off most of the balance before the statement cuts, so I get the cashback and have a low utilization reported?



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