topic Re: How early should you pay in full? in Credit Cards

How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 21:59:23 GMT

So I only have two cards and I pay them both in full each month, and I also pay them down between statements to keep my utilization low for when the statement posts.

I have always payed before the due date and have never carried a balance so far. But does it matter *how* early I pay it off? In other words, if I pay my statement off the very next day after the statement comes out, does that look better than waiting merely a day or two before the due date? Does this even matter at all?

Re: How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 22:04:17 GMT

In most cases, it doesn't matter. Most cards report once a month. If you auto pay one day after the statement or 3 weeks after, the following statement will still report the same amount.

Re: How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 22:04:27 GMT

@Anonymous wrote:
So I only have two cards and I pay them both in full each month, and I also pay them down between statements to keep my utilization low for when the statement posts.

I have always payed before the due date and have never carried a balance so far. But does it matter *how* early I pay it off? In other words, if I pay my statement off the very next day after the statement comes out, does that look better than waiting merely a day or two before the due date? Does this even matter at all?

Doesn't make any difference to your credit. As long as you pay it by the due date, they're happy. For you though paying early is depriving you from taking advantage of the grace period where no interest is accrued.

Re: How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 22:51:41 GMT

If you're disciplined enough, it's always good to take advantage of the grace period.

Re: How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 22:58:25 GMT

While I am fully aware of the time value of money, given the relatively short timeframe and the interest earned in the type of account that a payment would be made out of, it makes absolutely no financial difference if you use all of the grace period or one day. It also makes no difference to the credit score. If you're concerned, just turn on autopay and pay before the due date.

Re: How early should you pay in full?

Anonymous — Wed, 12 Oct 2016 23:10:15 GMT

Thanks for the responses guys.

As far as the grace period goes, my statements are very low for now, as my starting limits are only $500. So for example I just payed my Capital One statement and it was $25. Grace period means nothing to me right now and I'd rather just pay it right away.

Re: How early should you pay in full?

Kevin86475391 — Thu, 13 Oct 2016 01:26:08 GMT

@Anonymous wrote:
While I am fully aware of the time value of money, given the relatively short timeframe and the interest earned in the type of account that a payment would be made out of, it makes absolutely no financial difference if you use all of the grace period or one day. It also makes no difference to the credit score. If you're concerned, just turn on autopay and pay before the due date.

I very much agree. Interest rates are so low right now that unless someone's statement balances are huge...it's barely worth considering. Do whatever works for you. Your creditor won't care either way since it's the balance at the report date that affects your score.

Re: How early should you pay in full?

NRB525 — Thu, 13 Oct 2016 13:14:30 GMT

@Anonymous wrote:
Thanks for the responses guys.

As far as the grace period goes, my statements are very low for now, as my starting limits are only $500. So for example I just payed my Capital One statement and it was $25. Grace period means nothing to me right now and I'd rather just pay it right away.

With limits like that, you are better off, for peace of mind, to pay immediately. That way, when you are out and about, if there is something you need to use your card for, you have the limit available.

Having the card reporting, in this case, is the vast majority of positive influence on your credit, not the nuances of which day you paid. Even the amount reported, if $400 of the $500 on one statement, is not going to impact your credit negatively in the long run. That utilization item may be some points drag for the short term, but that quickly comes back as the utilization is reported lower in later months.

Re: How early should you pay in full?

Thomas_Thumb — Thu, 13 Oct 2016 14:24:30 GMT

@Anonymous wrote:
So I only have two cards and I pay them both in full each month, and I also pay them down between statements to keep my utilization low for when the statement posts.

I have always payed before the due date and have never carried a balance so far. But does it matter *how* early I pay it off? In other words, if I pay my statement off the very next day after the statement comes out, does that look better than waiting merely a day or two before the due date? Does this even matter at all?

In answer to your question - it matters not either way. Just pay before the due date and all is good. Both approaches show positive payment history and build credit.

If you charge a lot on a low limit card and let the full amount report (resulting in a card utilization above 50%), your Fico scores may drop temporarily but will recover fully the following month if utilization of CL is reduced. If a temporary score drop is concerning to you, make a partial payment prior to statement cut date and then PIF the ensuing statement balance.

Re: How early should you pay in full?

joltdude — Thu, 13 Oct 2016 16:15:04 GMT

Im wondering though if the OP is letting any balance report... Still would PIF but id let at least a balance report (PIF after statement) on one of the cards..... its that 0 utilization on all cards problem.... No?

Re: How early should you pay in full?

Thomas_Thumb — Thu, 13 Oct 2016 16:57:10 GMT

@joltdude wrote:
Im wondering though if the OP is letting any balance report... Still would PIF but id let at least a balance report (PIF after statement) on one of the cards..... its that 0 utilization on all cards problem.... No?

Based on the statement from OP pasted below, the OP is not paying off balances completely before statement cuts.

[But does it matter *how* early I pay it off? In other words, if I pay my statement off the very next day after the statement comes out, does that look better than waiting merely a day or two before the due date? Does this even matter at all?]

P.S. Fico score would be depressed if utilization were zero but, that is not the case for the OP (per the below statement from the OP).

[As far as the grace period goes, my statements are very low for now, as my starting limits are only $500. So for example I just payed my Capital One statement and it was $25.]

Re: How early should you pay in full?

Anonymous — Thu, 13 Oct 2016 20:56:22 GMT

joltdude, I am letting a balance report. That's the $25 statement I was talking about. On both cars I pay off the majority of the balance before the statement will cut, but I leave a small amount there to post a low utilization statement.

So for example I might make $400 worth of purchases on a card, but I would make a $350 payment before the statement posts so that my actual statement is only at 10% UT. And when I get the statement I pay the 50 bucks off and start new again.

Re: How early should you pay in full?

Anonymous — Thu, 13 Oct 2016 20:58:06 GMT

I meant cards*, not cars. You can't edit posts here?

Thomas Thumb has the story right.

Re: How early should you pay in full?

Stryder — Thu, 13 Oct 2016 21:07:50 GMT

@Anonymous wrote:
I meant cards*, not cars. You can't edit posts here?

Thomas Thumb has the story right.

Click "Options" in the upper righthand portion of your post, select Edit

Re: How early should you pay in full?

Anonymous — Thu, 13 Oct 2016 21:41:45 GMT

@Kevin86475391 wrote:
@Anonymous wrote:
While I am fully aware of the time value of money, given the relatively short timeframe and the interest earned in the type of account that a payment would be made out of, it makes absolutely no financial difference if you use all of the grace period or one day. It also makes no difference to the credit score. If you're concerned, just turn on autopay and pay before the due date.
I very much agree. Interest rates are so low right now that unless someone's statement balances are huge...it's barely worth considering. Do whatever works for you. Your creditor won't care either way since it's the balance at the report date that affects your score.

Yes, but there's no financial advantage in paying early either (and no score advantage) so it's really is you belong to the "a little over a long time adds up" school of thought. For those that can always PIF, setting autopay on the issuers site, statement balance in full on due date, is the way to go IMO, and you can always pay early if you choose

Re: How early should you pay in full?

joltdude — Thu, 13 Oct 2016 22:42:11 GMT

I wasn't sure I was reading it correctly.... Thats all.. Yeah. it doesnt matter if its right after the statement is generated or near the end of the billing cycle to pay it off... Just that its not before.. I misunderstood and thought the OP was paying it off before the statement date... which would not be productive ... Reason I asked what I did...

Im actually starting to see a few cases of folks in the forum who have paid in full before the statement generates.. and have problems with not enough experience with credit type issues.. Because it appears as if they arent using any credit, ergo no experience with credit... though thats not the case.....

-J

Re: How early should you pay in full?

newhis — Fri, 14 Oct 2016 00:17:20 GMT

@Anonymous wrote:
Thanks for the responses guys.

As far as the grace period goes, my statements are very low for now, as my starting limits are only $500. So for example I just payed my Capital One statement and it was $25. Grace period means nothing to me right now and I'd rather just pay it right away.

If you want to increase your score a little (befor an app), you can pay 1 card to $0 before statement close and let just 1 report around $25 (out of $500). It should be a few points better than having both cards reporting a balance.