topic Re: High balance in-between credit statements & spending more than the credit limit. in Credit Cards

High balance in-between credit statements & spending more than the credit limit.

ksantangelo23 — Tue, 24 Sep 2013 00:44:04 GMT

Hello, I recently just got approved for my first credit card, American Express Blue Cash Preferred. I want to maximize my rewards, but not let my credit limit get in the way, and want to continue building my score.

I've done a bit of research to prepare myself and know having a high utlization rate will hurt my credit, but I cant find an answer to these questions:

When is the utilization rate determined - real-time or on the statement date? (which may also answer: will having a high balance for a short time result in a high utilization?)

And, can I spend more than my credit limit per month by paying off charges immediatly without a negative effect on my report?

Assuming my credit limit is $1,000, is it possible for me to charge $750, pay it down online the same day, then after the payment clears and balance returns to $0, charge another $750 the following day, pay it down again, charge another $750, and pay it down again?

If that is possible, would that result in a high credit utilization if my balance is zero on the statement date?

Thanks so much!

Re: High balance in-between credit statements & spending more than the credit limit.

parakleet — Tue, 24 Sep 2013 00:43:11 GMT

1. Utilization is determined by what is reported to the credit bureau by the CCC. Typically, that is the statement balance.
2. Yes.

Re: High balance in-between credit statements & spending more than the credit limit.

myjourney — Tue, 24 Sep 2013 00:45:16 GMT

@ksantangelo23 wrote:
Hello, I recently just got approved for my first credit card, American Express Blue Cash Preferred. I want to maximize my rewards, but not let my credit limit get in the way, and want to continue building my score.

I've done a bit of research to prepare myself and know having a high utlization rate will hurt my credit, but I cant find an answer to these questions:

When is the utilization rate determined - real-time or on the statement date? (which may also answer: will having a high balance for a short time result in a high utilization?) You can basicly run the card to max as long as before the statement cuts you pay it off

And, can I spend more than my credit limit per month by paying off charges immediatly without a negative effect on my report? yes see above answer

Assuming my credit limit is $1,000, is it possible for me to charge $750, pay it down online the same day, then after the payment clears and balance returns to $0, charge another $750 the following day, pay it down again, charge another $750, and pay it down again? This would be over my $1,000 credit limit. Allow a day or 2 for charges to post so that you can pay it.........you can not pay on pending charges and also allow an extra day or two for payments to clear your bank and post to your accounts

If that is possible, would that result in a high credit utilization if my balance is zero on the statement date? UTL will be high if you let a high balance statement cut paying down before statement cuts avoids this

Thanks so much!

Welcome to the forum

Re: High balance in-between credit statements & spending more than the credit limit.

JSS3 — Tue, 24 Sep 2013 00:51:10 GMT

To circumvent high utilization, find out your statement closing date. It's usually a few days AFTER your due date(approx 3-5 days). Get your balance down to whatever you want reported to the 3 bureaus BY your closing date. Always remember to at least pay the minimum by your due date though.

Also, if you can, try requesting your due date be the beginning of the month. That way once it's reported, you can do whatever with your card and not have to worry about being "caught" with a high balance....unless they do a mid cycle/off cycle report. Those are rare.

And yes, you can spend then payback immediately.

Re: High balance in-between credit statements & spending more than the credit limit.

CreditScholar — Tue, 24 Sep 2013 01:55:25 GMT

@JSS3 wrote:
To circumvent high utilization, find out your statement closing date. It's usually a few days AFTER your due date(approx 3-5 days). Get your balance down to whatever you want reported to the 3 bureaus BY your closing date. Always remember to at least pay the minimum by your due date though.

Also, if you can, try requesting your due date be the beginning of the month. That way once it's reported, you can do whatever with your card and not have to worry about being "caught" with a high balance....unless they do a mid cycle/off cycle report. Those are rare.

And yes, you can spend then payback immediately.

Also be careful to spend in line with your reported income. If you reported an income of 35k when you applied (for example), but charge 4k per month and pay it off weekly, it'll raise some eyebrows (and perhaps a FR).

Re: High balance in-between credit statements & spending more than the credit limit.

Anonymous — Tue, 24 Sep 2013 01:59:45 GMT

Also be careful to spend in line with your reported income. If you reported an income of 35k when you applied (for example), but charge 4k per month and pay it off weekly, it'll raise some eyebrows (and perhaps a FR).

Keeping this in mind.

After your first couple payments. Feel free to go over limit as long as you aren't letting it report.

Also, at 61 days you will be up for a 3x cli.

Re: High balance in-between credit statements & spending more than the credit limit.

SnackTrader — Tue, 24 Sep 2013 02:01:18 GMT

On your Amex account I is really easy to find your statement closing date. It says right on the first page offer you log in: "Recent Charges Since Sept XX (Closing Date Oct XX)"

Re: High balance in-between credit statements & spending more than the credit limit.

takeshi74 — Tue, 24 Sep 2013 04:09:29 GMT

@ksantangelo23 wrote:
When is the utilization rate determined - real-time or on the statement date? (which may also answer: will having a high balance for a short time result in a high utilization?)

Your balance is typically reported at statement close (some cards report at other times). Utilization always implies "current utilization". It's determined whenever your report is pulled and is based on whatever is on your report.

As for the second question -- it all depends on what balance is reported. "Short time" doesn't really mean anything or tell us enough to answer your question. Even if your high balance is only for a few days it can impact your utilization if the high balance is reported. On the other hand, you could have a high balance for the majority of the statement period, pay it off prior to close and have no balance reported (i.e no utilization).

As other have said, to reduce utilization, pay the balance down/off before statement close so that a lower balance or no balance is reported.

@ksantangelo23 wrote:

And, can I spend more than my credit limit per month by paying off charges immediatly without a negative effect on my report?

Absolutely. People do that all the time. Your credit limit is a limit on the balance, not on usage.

@JSS3 wrote:
To circumvent high utilization, find out your statement closing date. It's usually a few days AFTER your due date(approx 3-5 days).

It seems that way but technically your close date is before the due date (time in between is the grace period). The close date after the due date is the next statement's close date.

Re: High balance in-between credit statements & spending more than the credit limit.

youngandcreditwrthy — Tue, 24 Sep 2013 03:56:41 GMT

Yup. My Amex is due by the 7th but it closed the 13th. They typically report what's on the statement.

Re: High balance in-between credit statements & spending more than the credit limit.

JSS3 — Tue, 24 Sep 2013 13:24:52 GMT

@ksantangelo23 wrote:
Hello, I recently just got approved for my first credit card, American Express Blue Cash Preferred. I want to maximize my rewards, but not let my credit limit get in the way, and want to continue building my score.

I've done a bit of research to prepare myself and know having a high utlization rate will hurt my credit, but I cant find an answer to these questions:

When is the utilization rate determined - real-time or on the statement date? (which may also answer: will having a high balance for a short time result in a high utilization?)

And, can I spend more than my credit limit per month by paying off charges immediatly without a negative effect on my report?

Assuming my credit limit is $1,000, is it possible for me to charge $750, pay it down online the same day, then after the payment clears and balance returns to $0, charge another $750 the following day, pay it down again, charge another $750, and pay it down again?

If that is possible, would that result in a high credit utilization if my balance is zero on the statement date?

Thanks so much!

Re: High balance in-between credit statements & spending more than the credit limit.

ksantangelo23 — Tue, 24 Sep 2013 13:35:26 GMT

Thanks for all the great replies and the welcoming . My questions have been answered.

Hopefully my limit will be higher than $1,000, but if not, I cant complain - being my first credit card.

Also, as soon as I receive my card in the mail (which I can't wait for!) I'll make note of my statement date and be sure to give enough time for any payments to clear before then. My intention has always been to carry zero balance month-to-month anyway.

Again, thank you everyone.

Re: High balance in-between credit statements & spending more than the credit limit.

JSS3 — Tue, 24 Sep 2013 13:59:33 GMT

takeshi74 wrote:

It seems that way but technically your close date is before the due date (time in between is the grace period). The close date after the due date is the next statement's close date.

Both decriptions are correct.

If A = due date

If B = closing date

A is before B and B is before A since it's a continuous cycle.

The due date for one of my cards lands on the 6th of every month. It's closing date is the 9th. If I pay down to my desired utlization before the 9th, what's then reported to the bureaus is the balance(if any) for that newly finished cycle. Now, after that closing, and the cycle resets on the 10th, what's then owed(if any) is for the next due date and it's closing.

ETA: I see we're both saying the same thing. Your point is more focusing on the cycle, itself. I'm speaking on how not to get caught with a high utilization. In that, it's correct to stress the closing date for that specific cyle, he/she is not wanting to be reported with a high utilization, is right after the due date. So pay it down before then.

Re: High balance in-between credit statements & spending more than the credit limit.

JSS3 — Tue, 24 Sep 2013 14:08:04 GMT

@ksantangelo23 wrote:
Thanks for all the great replies and the welcoming . My questions have been answered.

Hopefully my limit will be higher than $1,000, but if not, I cant complain - being my first credit card.

Also, as soon as I receive my card in the mail (which I can't wait for!) I'll make note of my statement date and be sure to give enough time for any payments to clear before then. My intention has always been to carry zero balance month-to-month anyway.

Again, thank you everyone.

I've never actually seen anywhere on my welcome material where it stated my closing date. It always says, "You'll be billed approximately 23 days after you've made a purchase". Something along those lines which isn't very specific. I've always either called and asked for my closing date or looked online to see when my minimum owed is saying $25 instead of 0(if you're carrying a balance) or seeing the next month's due date if you're not carrying one. That's when you know they've come through and collected your info. 9/10 times I call to ask though. Sometimes, as in the case of Chase and Discover, they can tell you the closing date upfront before you purchase anything. Other times I've been told it depends on if I make a purchase before a certain date(as with my Paypal account).

Re: High balance in-between credit statements & spending more than the credit limit.

codimom — Tue, 24 Sep 2013 15:32:57 GMT

Oh, you don't know your limit? Call them and find out!!!

Re: High balance in-between credit statements & spending more than the credit limit.

ksantangelo23 — Wed, 25 Sep 2013 22:57:22 GMT

@codimom wrote:
Oh, you don't know your limit? Call them and find out!!!

well, I decided to wait so that I might get a fun surprise this week, I just got my card in the mail an my limit is $5,800 and APR of 12.99%!

I expected $1,000 - $1,500 with an APR of 18-20% at best. Haha *happy dance*