Confused about credit card payments

[Anonymous]

I currently have 3 credit cards

1.  USAA- Secured 250

2. Cap 1 -Unsecured 500

3. Discover- Unsecured 1200

I have been charging small amounts and PIF before the statements are released.  All cards are reporting 0 balances but my credit scores declined by two points. After reading some posts, I realized that the cards should report a balance.  Does this mean that I should not pay off the entire balance before the statements are released. Should I only pay part of the balance monthly before the due date and pay interest on the remaining balance? I should know the answer, but I'm really confused.

[CH-7-Mission-Accomplished]

You should essentially forget completely the "due date" unless you plan on carrying a balance.  The important date to focus on is the statement generated date.

So charge all you want on the card during the month.  Make interim payments if you need to because the limits are low for your spending amounts.

But if your statement cut date is say the 23rd of the month, you want to stop using the card about 2 to 3 days before that (the 20th or 21st) so that the payments can post (they won't let you pay unposted payments from a payment initiated on their website).  The the day before the statement cuts, initiate a payment from the credit card company's webste for all the balance except for $2 - $5.  Let the statement cut showing that $2 or $5 statement balance (on the 23rd) and then on the 24th or 25th, initiate another payment to pay off the $2 - $5 you left on the card.

Does this make sense?  Think of statement cut dates as due dates and make sure everything but just a couple of bucks is paid by that statement cut date.

Of couse you only want on card to report this $2 to $5, so if you have other credit cards, pay those accounts to zero by the statement date so the statement will cut and report a zero balance.

That's all there is to it

[Anonymous]

Thanks for your reply. I have just one more question: Should the cut date be listed on the statement or will I have to call for that information?

[CH-7-Mission-Accomplished]

Once you have your first statement you will know it.  You can call and ask the CSR.  Im not sure they will know or give you accurate information.

The best strategy is to have only a very small charge on your card during the first month until you know the statement cut date.  Then you can proceed as normal.

I always pretend that my statement cut date is one or two days prior to the date I see on the statement.  This is in case they move it by a day or two due to a weekend or something.  Most of the time lenders don't do this, but some have done it at times.  You will get a feel for each credit card lender after you have 6 to 12 statements with them.

If you don't get it right one month, it doesn't matter because you can fix it the next month (in terms of balances reporting).  It can be very frustrating though when you are trying to see the fruits of your efforts in terms of a score boost.  It will sort it out the next month if you stay on plan.

[Anonymous]

Thank you!

[Anonymous]

I'm lost. This may be due to the fact I just woke up not too long ago. Anyway, what you're saying if I understand this is:

1. Statement Date is most important.

2. When the statement cuts you want to make sure you have a balance.

3. After statement cuts make payments and get the card under $5 so that it reports to the CB's as low balance.

Am I close? Sorry in advance. 

[Anonymous]

Not quite. You want your statement balance to be $2 - $5 (actually you want it to be 1% - 9% of the limit on that card, which in this case is $2-5 for you). So you want to plan ahead of the statement date so that when it cuts, it is only reflecting that $2-5 balance.

[Anonymous]

Thanks for hte clarification. I'll start adding statement dates to my Excel spreadsheet so I can better keep track of this. 

[Anonymous]

---

@Anonymous wrote:

Thanks for hte clarification. I'll start adding statement dates to my Excel spreadsheet so I can better keep track of this. 

---

And keep in mind you only want ONE of your cards to report a balance, usually the one with the highest limit, but it really doesn't matter. The others you want to PIF before the statement period ends. I'm not sure about Discover or USAA, but with Cap One the statement closes three days AFTER the payment due date. I give mine 5 days to make sure all charges get posted, and I don't use it again until the day after the statement close date.

Statement dates used to vary, because many banks used a straight 30 day billing cycle, causing your due date to "creep" forward with each 31 day month, but in the mid 2000's they passed a banking regulation requiring due dates to always be the same day of the month.