topic Re: Leaving a balance on first billing cycle in Credit Cards

Leaving a balance on first billing cycle

Luna2 — Sun, 02 Jul 2017 22:07:50 GMT

Hello, I am 18 years old and have been approved for a card with a 500 dollar limit. I spoke to an associate with my bank who told me that it would be a good idea to not pay the balance on my credit card for the first month. He said that because I have no credit history, and this is my first ever billing cycle, it would be a good idea to let the balance carry over and then pay it off in the beginning of the next billing cycle. He told me not even to make a minimum payment. From that point on, he said that I should pay my balance off in full each month, which is what I was planning on doing from the beginning. His reasoning for this was to show the credit bureaus that I at one point had a balance, and then I paid it off, as opposed to always having a 0 balance because I'll pay it off every month. I was under the impression that letting a balance carry over would always be a bad idea. Is there any truth to what the associate told me? I only care about what will build the most credit. The interest doesn't matter to me because I have a 0% apr for my first 12 billing cycles. I really appreciate the help.

Re: Leaving a balance on first billing cycle

jawbrkr — Sun, 02 Jul 2017 22:22:29 GMT

Well, the next billing period begins right after your statement close date. So carrying a balance into the next billing period is normal, we all do it. But you just have to be sure to pay whatever balance you have prior to or on the due date. A zero balance reporting is definitely not a positive, especially if that is your only card. While your issuer sees that you are putting some spend on the card, the credit bureau seeing a zero balance says to them that you are not using the credit given to you. You should always allow for one card to report a balance...usually less than 10% of your overall credit line is ideal.

Re: Leaving a balance on first billing cycle

austinguy907 — Sun, 02 Jul 2017 22:11:40 GMT

Don't listen to this at all!!!!!

If you do what they say you'll end up with a late pay potentially and that's no bueno!

Pay it down to about $10 and then let the statement cut and then pay off the remainder.

Re: Leaving a balance on first billing cycle

Luna2 — Sun, 02 Jul 2017 22:31:49 GMT

Jawbrkr, he told me not to pay it before the closing date. He said to wait until after the closing date, when my next billing cycle started, then pay off my balance.

Re: Leaving a balance on first billing cycle

Luna2 — Sun, 02 Jul 2017 22:33:49 GMT

One point I forgot to mention is that I do not have a due date yet. I only have a closing date for now because this is my first billing cycle.

Re: Leaving a balance on first billing cycle

Anonymous — Sun, 02 Jul 2017 23:43:08 GMT

Your bank associate is right. It could help, let the first cycle close. Then you can pay it off, you won't pay any interest as long as you pay before the due date and at the same time it reports to your credit agency that theres a balance and it may also record a " highest balance" which shows an amount on your report.

I think he means if you always pay before the billing cycle ends from the very begining and till forever itll always show 0/0/0 on everything. $0 balance and $0 highest balance, etc.

Although not necessary, I think your bank associate just wants you to get your first REPORTED balance in the books. Then after that, you can pay it off before the statmentr cut if you want.

Its only a bad idea to carry over a balance, if youre not paying it in full because of interest. You can still show activity and a balance on your report WITHOUT paying interest (pay it off in full after it cuts and before due date). Whatever is on your statment balance is whats get reported.

BTW, I think there was just a miscommunication when he said dont even pay the min payment. HE prob means dont pay anything at all before the billing cycle ends. Just pay it after it closes so it shows a balance. Thats what I think he meant.

Re: Leaving a balance on first billing cycle

AverageJoesCredit — Sun, 02 Jul 2017 23:40:44 GMT

If you end up with a minimum balace , pay it regardless, you dont want to start off with a missed payment

Letting a balance carry over is not bad or evil. If you have 0% promo period as you do, its fine. And sometime we have to carry balances and youll find many of us still establish good credit. Pif is a great mentality to have but its not the be all end all in my humble opinion

Re: Leaving a balance on first billing cycle

NRB525 — Mon, 03 Jul 2017 05:02:07 GMT

OP congrats on getting your first credit card.

Do not charge over the limit of $500

When the first statement cuts, look closely at what that Minimum Payment is, and pay at least that amount by the due date on the statement. That comment about "don't make the minimum payment" has me concerned. Always pay at least the minimum payment, before the due date. Always. Always.

If you only have the one card, then you want it to report a balance on each statement.

To avoid interest, pay at least that statement balance by the due date. If interest has started ( at some point after your 0% intro finishes) then it's more complicated to get that interest to stop, but that is a future topic.

Re: Leaving a balance on first billing cycle

HeavenOhio — Tue, 04 Jul 2017 12:16:03 GMT

The advice is generally OK because no payment is due. But the rep's explanation was sloppy at best. Telling you not to make the minimum payment was bad. First, there's no minimum to begin with. But more importantly, a customer could hear that advice and apply it to another month when money is actually due.

Use the card as you need to. Make mid-cycle payments to ensure that you don't exceed your limit and to free up room for more charges. And bring your balance down to a reasonable amount before the statement cuts. 28.9% of the limit ($144 on a $500 limit) is considered responsible. Between $5 and 8.9% of your limit (between $5 and $44) will optimize your score. Don't let the card report a zero balance; that'll ding you.

When I have a new card, I like to make a payment early on so I know what to expect when it counts. In your case, I'd make a payment before the first statement cuts if your balance needs to be brought down. If the balance is already low, pay in full after you have a statement. After that, make whatever payments are necessary to keep your balance in check. And keep either 28.9% or 8.9% in mind when it's time for the statement to cut.

By the way, which bank issued your card? Most banks report the statement balance right after the statement cuts. But some handle reporting differently.

Re: Leaving a balance on first billing cycle

Luna2 — Tue, 04 Jul 2017 16:33:48 GMT

I have the Bank of America Cash Rewards card. I really appreciate all of your advice, and I have one more question. With my card, I can get 150 dollars in rewards if I spend 500 dollars in the 3 months. Would it be possible to make a large purchase, say 400 dollars, and then pay it off the same day or day after to prevent the high credit usage from effecting my credit score? Because putting 500 dollars on my card seems almost impossible otherwise, as I'm trying to keep my credit usage under 10% at all costs.

Re: Leaving a balance on first billing cycle

HeavenOhio — Tue, 04 Jul 2017 17:06:03 GMT

BOA reports the statement balance after the statement cuts, so there's no oddball reporting to deal with.

Some cards will let you pay toward pending transactions or an amount above your current balance. But with most cards, you can't pay for a purchase until the transaction has actually posted. That can take from one to five days after the purchase takes place. Someone here can confirm whether or not that applies to BOA.

If you're going to need to wait for the transaction to post, make the purchase as long as there's plenty of time for both the purchase and the payment to clear before the statement cuts.