topic Re: Can Someone Please Explain This Slowly To Me in General Credit Topics

Can Someone Please Explain This Slowly To Me

ChiTownTony — Sat, 14 Mar 2020 17:30:15 GMT

Hi,

For whatever reason, my brain simply cannot comprehend this simple matter regarding AZEO. Let me give an example in terms that my brain can handle. This is hypothetical.

I have:

Credit Card 1: Zero Balance

Credit Card 2: Zero Balance

Credit Card 3: $100 Balance

Let's say Credit Card 3's due date is April 1st and it reports to the CRA on April 4th. How could I make a payment that will show a balance yet not run up interest? I simply cannot grasp this concept.

Thanks in advance.

Re: Can Someone Please Explain This Slowly To Me

Anonymous — Sat, 14 Mar 2020 17:37:55 GMT

Pay the account in full and then charge something before your statement date.

Re: Can Someone Please Explain This Slowly To Me

Anonymous — Sat, 14 Mar 2020 17:56:09 GMT

As long as the card with the balance has a grace period, which very few cards don't (mostly subprime cards don't), you will not be charged interest as long as you pay your statement balance every month.

Re: Can Someone Please Explain This Slowly To Me

Anonymous — Sat, 14 Mar 2020 18:34:53 GMT

You want at least one account to report a balance to the CRA's, meaning let the balance reflect on your statement and reports, then pay it off before the next due date listed on your account statement so will not accrue interest.

Re: Can Someone Please Explain This Slowly To Me

ChiTownTony — Sat, 14 Mar 2020 18:46:32 GMT

"Pay the account in full and then charge something before your statement date."

This makes sense to me. Thanks.

Re: Can Someone Please Explain This Slowly To Me

ChiTownTony — Sat, 14 Mar 2020 18:48:57 GMT

"You want at least one account to report a balance to the CRA's, meaning let the balance reflect on your statement and reports, then pay it off before the next due date listed on your account statement so will not accrue interest."

I cannot follow along with this. This is the problem my brain is having. Please explain how I will avoid interest? If I purchased something for $100 and only pay let's say $80 so I show a balance, won't I still have interest on the unpaid balance? This is my mental sticking point. Please help me figure this out.

Thanks

Re: Can Someone Please Explain This Slowly To Me

staticvoidmain — Sat, 14 Mar 2020 20:48:46 GMT

Due date comes after statement date (which is the usual reporting date). Pay the balance in full between the statement date and due date. What you are paying is the balance of the previous statement (the current due).

Is your hypothetical scenario really hypothetical? Can you provide exact dates?

In your example, If the statement date is 4th of March, the due date of that statement is 1st of April. Pay the March statement to avoid interest. Any purchase made after the 4th of March to the 4th of April has a due date of 1st of May, NOT April.

TL;DR:

- Purchases from March 4 to April 4 has a due date of May 1.

- Purchases of February 4 to March 4 has a due date of April 1.

- You will not pay interest because the due date is May 1, not April 1 (assuming you paid your March statement in full).

Re: Can Someone Please Explain This Slowly To Me

imaximous — Sat, 14 Mar 2020 20:50:18 GMT

You're overly complicating this. It's very simple. All you have to do is use your card as it was meant to be before anyone came up with this AZEO nonsense. So, make charges on it, let statement cut and pay your full statement balance by the due date or a few days before to be safe. That's all. You'll never incur interest charges if you do that.

Obviously, you gotta pick the right card to do this if you insist on AZEO and make sure you watch your utilization being reported on that card if you're looking to maximize your scores.

Also, not all banks report in the same way to the bureaus. So it's important to know what cards you're talking about and which one you're using for AZEO.

Re: Can Someone Please Explain This Slowly To Me

Trudy — Sat, 14 Mar 2020 21:37:46 GMT

@imaximous wrote:
you gotta pick the right card to do this if you insist on AZEO and make sure you watch your utilization being reported on that card if you're looking to maximize your scores.

Also, not all banks report in the same way to the bureaus. So it's important to know what cards you're talking about and which one you're using for AZEO.

This is good to note. You want to use a bankcard for the one revolver that reports a balance. Not a retail card. Also, US Bank is one that may have a due date of say the 14th and a statement date of the 19th but will report the balance as of the last day of the month. For my convenience I moved my due date to the latest that was allowed for me, the 28th since I know it will report at the end of the month.

Also, there's a period that varies with revolvers between due date and report date to stay clear of or it will also get reported. But if you wait for the the actual statement (for most, not USBank and I think there's another) then you should be fine in knowing when and on what day you can begin a new cycle of charging without having the balance report unless you want it to.

I pay online so knowing that my due date is the 20th on a card and reports balance as of the 23rd let's me know not to spend on the 21st, 22nd and (23rd to be safe). Can resume spending on the 24th.

Re: Can Someone Please Explain This Slowly To Me

thornback — Sat, 14 Mar 2020 21:39:30 GMT

Just to clarify something first:

AZEO is not something you need to do all the time. It only provides a one-time boost to your scores (also profile dependent) which goes away as soon as you are no longer at AZEO -- the boost is not cumulative; IOW, it doesn't build upon itself month after month. AZEO is a good trick to know so you can implement prior to apping for new credit and squeeze out every available FICO point. Otherwise, you can just let your cards report as normal and just control your utilization if needbe. Keeping aggregate util less than 9% and individual less than 29% is good.

If, one month, your utilization is high, or if you're dealing with a low limit, you can pay your balance down before it reports to the bureaus so high utilization doesn't affect your scores. To do this, you must know your (1) billing cycle for each card, (2) the statement closing date, and the (3) payment due date. Most creditors report the balance as of your statement closing date -- but there are some that report the balance at other times - like the end of the month, so take that into consideration.

Here's an example of how to pay down util before the card balance reports to the bureaus:

Sample card A has a credit limit of $300 and a balance of $250. The billing cycle was from September 24th through the October 23rd. The Due Date is November 20th (assuming there is a 30-day grace period). The Statement Closing Date is the last date of the billing cycle - so October 23rd. This means I need to pay down my $250 balance to below 29% (less than $86) before October 23rd so my statement will reflect the lower balance which will be reported to the credit bureaus for that month. Then, after the statement cuts, I will pay the remaining $86 before the November 20th Due Date so I pay no interest on that balance.

The same concept applies to AZEO. However, instead of paying the balance down to less than 29% before the statement closing date, you would pay the balance down to $0 on your other two cards and refrain from using them again until after your statement cuts. This way, two cards report $0 and the third will report your less than 29% balance.

Re: Can Someone Please Explain This Slowly To Me

LifeIsAHighway — Sat, 14 Mar 2020 21:50:39 GMT

Hi @ChiTownTony,

Hope this helps:

Most credit cards (including the ones that you listed that you have in your post back in Dec) do not start accruing interest on the date of purchase. As @Saeren stated, there is a grace period. (*EXCEPTION - If you get a cash advance, use a convenience check, do a balance transfer...those transactions will begin accruing interest immediately.)

I'm going to use one of my credit cards as an example of how I do this. I have a cc that is due on the 5th of every month. The new statement cuts on the 8th of every month & that same day (the 8th) is when it reports to the bureaus. Any purchases I make are "interest free" as long as they are paid in full within the grace period. Look at the terms/conditions on your specific card to find out what that grace period is. It could be 25 days, 28 days, 30 days, etc. With my specific card, using the AZEO method, I can use as much of my credit limit as I want beginning on the 9th of the month (the day after the stmt cuts & it reports to the bureaus). I then, in one or multiple payments, pay the cc bal down to the amount I want reported to the bureaus by the due date (the 5th). I DO NOT USE THAT CARD FOR ANY PURCHASES OR MAKE ANY PMTS between the 5th & the 9th of each month. After the stmt cuts/reports, I pay off the balance that reported. Then, I can start using the cc again.

If I need to make a purchase using a cc between the 5th (due date) & 9th (day AFTER the stmt cuts/reports to bureaus), I just use one of my other cc's & then immediately pay it in full. Not sure if anyone else does it this way but it works perfect for me. I hope that my explanation doesn't make it even more confusing.

Re: Can Someone Please Explain This Slowly To Me

blindambition — Sat, 14 Mar 2020 21:45:28 GMT

@Trudy wrote:
@imaximous wrote:
you gotta pick the right card to do this if you insist on AZEO and make sure you watch your utilization being reported on that card if you're looking to maximize your scores.

Also, not all banks report in the same way to the bureaus. So it's important to know what cards you're talking about and which one you're using for AZEO.
This is good to note. You want to use a bankcard for the one revolver that reports a balance. Not a retail card. Also, US Bank is one that may have a due date of say the 14th and a statement date of the 19th but will report the balance as of the last day of the month. For my convenience I moved my due date to the latest that was allowed for me, the 28th since I know it will report at the end of the month.

Also, there's a period that varies with revolvers between due date and report date to stay clear of or it will also get reported. But if you wait for the the actual statement (for most, not USBank and I think there's another) then you should be fine in knowing when and on what day you can begin a new cycle of charging without having the balance report unless you want it to.
I pay online so knowing that my due date is the 20th on a card and reports balance as of the 23rd let's me know not to spend on the 21st, 22nd and (23rd to be safe). Can resume spending on the 24th.

You also don't want your one card reporting to be a Chase card. They automatically update at 0. Messing up AZEO

Re: Can Someone Please Explain This Slowly To Me

ChiTownTony — Sat, 14 Mar 2020 22:47:16 GMT

I really want to thank everyone for chiming in. I was actually being hypothetical. I do want to experiment with this though using my Regions Bank Visa as the card to report. The due date is the 2nd and it reports on the 5th. I verified by talking to them. Where I was wrong was not realizing that my balance is actually due a month ahead. I thought for example, that all charges I make in March come due at the end of March. Duh....I'm not dumb, I'm Italian....lol

Thanks again to everyone sincerely.

Tony

Re: Can Someone Please Explain This Slowly To Me

Anonymous — Sat, 14 Mar 2020 23:35:34 GMT

One last thing. There is a difference between reporting a balance and carrying a balance. Carrying a balance costs you interest. Your statement gets generated showing your total balance and minimum payment due, you make a payment (minimum payment or more but not the total balance). That means a balance has carried over to the next month. Reporting a balance means your statement gets generated showing your balance and minimum payment due. But this time and every time, you pay the total balance on the card. If course carrying a balance also is reporting a balance. To avoid reporting a balance, you would pay the total balance before the statement is generated.

Your card's cycle is designed to close, generate a statement, and expect a payment anywhere from the minimum amount to the total amount by the due date. Messing with AZEO goes against the normal cycle process. AZEO may help before applying for a mortgage, but other than that with the new scoring models being rolled out and those developed in the future, it could be counterproductive.

Re: Can Someone Please Explain This Slowly To Me

EverForward — Sat, 14 Mar 2020 23:58:17 GMT

@ChiTownTony that was a very good question. I learned much from everyone's contribution in this thread. Initially, I erroneously understoond AZEO as a monthly requirement. And, now I also better understand the utilization rates, i.e. less than 29% per card and less than 9% combined.

Rebuilding, I only have brand new NFCU and Cap1 cards, and just received my first statements, with 3/9 & 3/12 closing and 4/6 & 4/9 due dates, respectively. NFCU had a $0 statement balance and Cap1 a $25.33 statement balance. I paid Cap1 on 3/13 as I was such an eager beaver.

Now, I just have to figure out their report dates? Neither card has reported to date based on my recent credit report pull. Suppose, that might be roughly 4/9(NFCU) & 4/12(Cap1) next month? Guessing, this will come to me as I get a few months into it, with persistence and further engagement with this forum.

Re: Can Someone Please Explain This Slowly To Me

PicoFico — Sun, 15 Mar 2020 00:13:09 GMT

@ChiTownTony wrote:
Hi,

For whatever reason, my brain simply cannot comprehend this simple matter regarding AZEO. Let me give an example in terms that my brain can handle. This is hypothetical.

I have:
Credit Card 1: Zero Balance
Credit Card 2: Zero Balance
Credit Card 3: $100 Balance

Let's say Credit Card 3's due date is April 1st and it reports to the CRA on April 4th. How could I make a payment that will show a balance yet not run up interest? I simply cannot grasp this concept.

Thanks in advance.

I also struggled with the exact same scenario, except mine wasn't hypothetical.

In roughly 6 calls to NFCU, inquiring about when they report, EVERY rep told me it happens a few days AFTER the due date. That wrecked my brain, so I relied upon discover who confirmed that their reporting is on statement end date.

What I learned over time is, no one at NFCU understands what I was asking, or how their product works to that level of detail, because they all report on statement end date as well.

There was a lot of arm flailing for a while.

In your exact scenario, if you pay in full before due date, you won't accrue interest, but you'll take a hit for 0% utilization if it's your only card, since reporting happens after due date.

Re: Can Someone Please Explain This Slowly To Me

ChiTownTony — Sun, 15 Mar 2020 00:15:27 GMT

@EverForward wrote:
@ChiTownTony that was a very good question. I learned much from everyone's contribution in this thread. Initially, I erroneously understoond AZEO as a monthly requirement. And, now I also better understand the utilization rates, i.e. less than 29% per card and less than 9% combined.

Rebuilding, I only have brand new NFCU and Cap1 cards, and just received my first statements, with 3/9 & 3/12 closing and 4/6 & 4/9 due dates, respectively. NFCU had a $0 statement balance and Cap1 a $25.33 statement balance. I paid Cap1 on 3/13 as I was such an eager beaver.

Now, I just have to figure out their report dates? Neither card has reported to date based on my recent credit report pull. Suppose, that might be roughly 4/9(NFCU) & 4/12(Cap1) next month? Guessing, this will come to me as I get a few months into it, with persistence and further engagement with this forum.

EverForward, you can call the credit card companies and ask them when they report to the credit agencies which is what I did. It also may be on your bill as statement date. But I would call just to confirm. Also note, they may report early. For months, my PayPal credit (Synchrony) reported on the 25th. Last month (February) they reported on the 24th.

Re: Can Someone Please Explain This Slowly To Me

pinkandgrey — Sun, 15 Mar 2020 01:07:52 GMT

Statement cut date (April 4th in your example) is when your balance is reported. The DUE DATE is April 1 of the NEXT month. So let a balance report on the 4th, and then pay it before the due date on April 1 of the next month. You will not be charged interest unless the balance stays on past the due date (April 1).

Re: Can Someone Please Explain This Slowly To Me

SouthJamaica — Sun, 15 Mar 2020 02:36:16 GMT

@ChiTownTony wrote:
Hi,

For whatever reason, my brain simply cannot comprehend this simple matter regarding AZEO. Let me give an example in terms that my brain can handle. This is hypothetical.

I have:
Credit Card 1: Zero Balance
Credit Card 2: Zero Balance
Credit Card 3: $100 Balance

Let's say Credit Card 3's due date is April 1st and it reports to the CRA on April 4th. How could I make a payment that will show a balance yet not run up interest? I simply cannot grasp this concept.

Thanks in advance.

You don't pay interest because you reported a balance. You only pay interest if you don't pay the balance by the due date. So if you pay off Credit Card 3 after it reports, but before the due date, you pay no interest.

Re: Can Someone Please Explain This Slowly To Me

Anonymous — Sun, 15 Mar 2020 16:50:18 GMT

I was approved for my Cap1 card on 1/15. It took almost a full 2 months to actually show up on my reports. I also have a new NFCU card, approved on 2/20 & my statement closes on the 3/24. So I should be seeing it soon after the 24th. Hope that somewhat helps with reporting.