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Established Contributor
masscredit
Posts: 817
Registered: ‎07-17-2012
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Why Pay New Charges In Full Before Statement Closes?

Ok, in a way I know why some people PIF before their statement closes but I also don't see why. Unless you'll be applying for new credit just after the account posts to your CR, isn't it better in some ways to let the balance post and then just pay it off before the due date? Pretty much gives you the same results (using your credit and paying it off) and you also get to float the amount from 3-6/7 weeks depending on when the charges are made.


|****$8000****|****$6000*****|****$4500*****|****$2500****|****$1600****|****$3000****|******$1350******|*****$700*****|
EX - 657 (MyFico 10/02/14) TU - 657 (Walmart 11/08/14 ) EQ 04 - 696 (DCU -10/31/14) EQ 08 - 668 (MyFico -11/20/14)
Valued Contributor
nicholasyud
Posts: 1,737
Registered: ‎08-13-2012
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Re: Why Pay New Charges In Full Before Statement Closes?

i charge a cash advance on my card and they didnt even post on my account till the last day of my billing cycle......i wouldnt paid it because its take 2 day for them to process and they report 315 balance over 400 limit.......my score drop 14 points.....thats one of the reason why would we paid it before the cycle day.......also to prevent interest charge..........


Starting Score: 560
Current Score: 748 Wishlist: CSP, Simply Cash, SPG, BOLD, INK, United MP,
Goal Score: 800


Walmart: 10k |Usaa: 8k|BCE: 13k| Amex: NSPL|Dis: 9.4k|Cap: 5.5k|CAP: 2k|CSP: 13.4k| Pen:4.5k

Valued Contributor
Dustink
Posts: 3,016
Registered: ‎10-02-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?


masscredit wrote:

Ok, in a way I know why some people PIF before their statement closes but I also don't see why. Unless you'll be applying for new credit just after the account posts to your CR, isn't it better in some ways to let the balance post and then just pay it off before the due date? Pretty much gives you the same results (using your credit and paying it off) and you also get to float the amount from 3-6/7 weeks depending on when the charges are made.


Paying on the card throughout the month keeps utilization low. Try to always get the cards to report between 1-5% utilization to maximize score.

 

If you are not worried about your score. Just pay in full before the due date and keep that money in an interest bearing account.

 

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k          $8.5K          Closed          $19k         $6.5k           $24.2k        Closed          $5k         Closed       $8.5k        Closed      @2.49%
Valued Contributor
Dustink
Posts: 3,016
Registered: ‎10-02-2012
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Re: Why Pay New Charges In Full Before Statement Closes?


nicholasyud wrote:

i charge a cash advance on my card and they didnt even post on my account till the last day of my billing cycle......i wouldnt paid it because its take 2 day for them to process and they report 315 balance over 400 limit.......my score drop 14 points.....thats one of the reason why would we paid it before the cycle day.......also to prevent interest charge..........


Cash advances do not have an interest free period. So always try to avoid them. If you cannot avoid it, pay it off ASAP. Do not wait for a statement to pay a cash advance.

 

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k          $8.5K          Closed          $19k         $6.5k           $24.2k        Closed          $5k         Closed       $8.5k        Closed      @2.49%
Established Contributor
masscredit
Posts: 817
Registered: ‎07-17-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?


Dustink wrote:

nicholasyud wrote:

i charge a cash advance on my card and they didnt even post on my account till the last day of my billing cycle......i wouldnt paid it because its take 2 day for them to process and they report 315 balance over 400 limit.......my score drop 14 points.....thats one of the reason why would we paid it before the cycle day.......also to prevent interest charge..........


Cash advances do not have an interest free period. So always try to avoid them. If you cannot avoid it, pay it off ASAP. Do not wait for a statement to pay a cash advance.

 


Unless it's Walmart. You can get some cash back and not be charged interest like you would for a regular card's cash advance.  I can see doing it for cash advances and as mentioned, to keep your score up. Some new accounts posted balances to my report so my TU dropped by 22 points. A few inquiries probably didn't help either. 


|****$8000****|****$6000*****|****$4500*****|****$2500****|****$1600****|****$3000****|******$1350******|*****$700*****|
EX - 657 (MyFico 10/02/14) TU - 657 (Walmart 11/08/14 ) EQ 04 - 696 (DCU -10/31/14) EQ 08 - 668 (MyFico -11/20/14)
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seigex
Posts: 425
Registered: ‎05-16-2012
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Re: Why Pay New Charges In Full Before Statement Closes?

[ Edited ]

To add to what they said, paying on it before statement closes ensures that a small balance posts to the report. From an anecdotal study in another post, all cards PIF except a single card showing between 6% and 9% balance gives you the maximum points, then PIF before balance due date to keep from paying finance charges.

 

Although credit reports have no memory of the previous months balances and the next month the score will recover if a balance isn't held, I make sure every statement posts with the single card and 9% util in case for some emergency situation during that month, where I can't wait for the new balances to post, such as applying for a new car, or some new form of emergency credit/loan, I don't want to be caught with lower points that could either cause me to be denied or have a higher interest rate.

Lender Pull (11/3/12) FICO EX: 740 EQ: 680 TU: 702

NFCU VISA $17.5k / USAA AMEX $6k / USAA AMEX $4k / USAA VISA $4k / CHASE FREEDOM $3k / Capital One $500
Valued Contributor
Dustink
Posts: 3,016
Registered: ‎10-02-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?


seigex wrote:

To add to what they said, paying on it before statement closes ensures that a small balance posts to the report. From an anecdotal study in another post, all cards PIF except a single card showing between 6% and 9% balance gives you the maximum points, then PIF before balance due date to keep from paying finance charges.

 

Although credit reports have no memory of the previous months balances and the next month the score will recover if a balance isn't held, I make sure every statement posts with the single card and 9% util in case for some emergency situation during that month, where I can't wait for the new balances to post, such as applying for a new car, or some new form of emergency credit/loan, I don't want to be caught with lower points that could either cause me to be denied or have a higher interest rate.


My US Bank card reports its morning balance 3 days before the statement is created, it is very odd to me.

 

I agree with you on the one card reporting a balance. I think the theory behind that is a lower DTI ratio. One payment is less of a financial burden that two or more. As long as that 9% on one card falls between 1-5% total utilization, that is the ideal scenario.

 

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k          $8.5K          Closed          $19k         $6.5k           $24.2k        Closed          $5k         Closed       $8.5k        Closed      @2.49%
Valued Contributor
nicholasyud
Posts: 1,737
Registered: ‎08-13-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?

let me try your method this months and see how much the score improve :smileyvery-happy:


Starting Score: 560
Current Score: 748 Wishlist: CSP, Simply Cash, SPG, BOLD, INK, United MP,
Goal Score: 800


Walmart: 10k |Usaa: 8k|BCE: 13k| Amex: NSPL|Dis: 9.4k|Cap: 5.5k|CAP: 2k|CSP: 13.4k| Pen:4.5k

Valued Contributor
Dustink
Posts: 3,016
Registered: ‎10-02-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?

[ Edited ]

nicholasyud wrote:

let me try your method this months and see how much the score improve :smileyvery-happy:




What are your cards with limits. What are their reported balances?

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k          $8.5K          Closed          $19k         $6.5k           $24.2k        Closed          $5k         Closed       $8.5k        Closed      @2.49%
Valued Contributor
nicholasyud
Posts: 1,737
Registered: ‎08-13-2012
0

Re: Why Pay New Charges In Full Before Statement Closes?

low limit.....400 400 and 500 3 credit card.....low balance....but its 315/400 on one card last month ;-(


Starting Score: 560
Current Score: 748 Wishlist: CSP, Simply Cash, SPG, BOLD, INK, United MP,
Goal Score: 800


Walmart: 10k |Usaa: 8k|BCE: 13k| Amex: NSPL|Dis: 9.4k|Cap: 5.5k|CAP: 2k|CSP: 13.4k| Pen:4.5k


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