How to use my credit card?

[Anonymous]

Hello,

I just got disharged from BK7 a few months ago an recently I was pre approved for a Cap One credit card. I applied and was approved for 500 with no interest until june of 2015.

I have a few questions and would like to know if my plan with the card is a good one.

I spend around 100 dollars of groceries a week. I was planning on using the credit card just for my groceries and at the end of the month pay off the card and maybe just leave like maybe 40 dollars left in the credit card that way it is not completely paid off and I can start building credit.

Is this a good idea?

Is it okay to swipe the card every week for 100 dollars for groceries.

Also, i can be paying the card biweekly instead of waiting the month. Does this help.

I want to use the card to rebuild my credit.

Let me know what you guys think.

Thanks

[jon22guitar]

Cap One will only care about your spend when considering you for a CLI in the future.
How much you spend (utlilization)is updated monthly on your credit report.
Only carry a balance if there is 0% APR; otherwise, ALWAYS PIF.

[coldnmn]

Use your credit limit without going over. Before statement closes ideally pay one card to 1%-9% utilization. To avoid paying interest pay the remainder of statement balance before due date. If you don't pay the statement balance by due date and carry it over until next statement all new purchases accrue interest from time of purchase. This will do more for your credit score and your pocket book than paying interest needlessly. Good Luck with your credit journey.

[Anonymous]

Most cards have a statement balance and an outstanding balance. Pay off your statement balance but not the outstanding balance. This way none of your actively used cards will ever hit zero balance. This is less effective and harder to do when juggling multiple cards, but for someone with 1-2 cards who is rebuiliding credit, it is pretty easy. 

Statement balance = amount charged on statement. Pay in full to avoid interest. 

Outstanding balance = total amount owed on card (other than pending charges) including charges made after the last date of the statement. 

Note: Outstanding balance is often called "payoff" or something else. I am just using Amex terminology since it is easy to understand. 

If you use your credit card frequently, you just need to wait a day or two after the statement is issued for the outstanding balance to be over the statement balance. Then you pay your statement balance in full so you get no interest, but your card will not show a zero balance. 

[coldnmn]

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@Anonymous wrote:

Most cards have a statement balance and an outstanding balance. Pay off your statement balance but not the outstanding balance. This way none of your actively used cards will ever hit zero balance. This is less effective and harder to do when juggling multiple cards, but for someone with 1-2 cards who is rebuiliding credit, it is pretty easy. 

Statement balance = amount charged on statement. Pay in full to avoid interest. 

Outstanding balance = total amount owed on card (other than pending charges) including charges made after the last date of the statement. 

Note: Outstanding balance is often called "payoff" or something else. I am just using Amex terminology since it is easy to understand. 

If you use your credit card frequently, you just need to wait a day or two after the statement is issued for the outstanding balance to be over the statement balance. Then you pay your statement balance in full so you get no interest, but your card will not show a zero balance. 

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If you have one card with a $500 CL and have a $400 statement balance you will have 80% utilization and your Fico score will take a nose dive. That is the reason to pay it down to 1%-9% utilization before statement closing so that doesn't happen. But you always should show at least 1% because 0% also lowers your Fico score.

[Anonymous]

Good point. I was merely talking generalities. Pay the statement balance in full but not every charge. Paying more than the statement balance but less than the outstanding (payoff) balance is great and so is making multiple payments over the course of the statement to keep the limit low. Personally, I'd find it easier not to use more than 10-20% of my limit and pay once a month and pay other charges by another means until my credit limits are raised as my credit improves. But you are correct that one should keep their utilization low. 

[coldnmn]

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@Anonymous wrote:

Good point. I was merely talking generalities. Pay the statement balance in full but not every charge. Paying more than the statement balance but less than the outstanding (payoff) balance is great and so is making multiple payments over the course of the statement to keep the limit low. Personally, I'd find it easier not to use more than 10-20% of my limit and pay once a month and pay other charges by another means until my credit limits are raised as my credit improves. But you are correct that one should keep their utilization low. 

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Cap1 likes to see usage on their cards using it and paying it off multiple times responsibly shows they can trust you and you need a CLI in my opinion. By paying it down to 1%-9% is mostly for credit score and showing other creditors your not a financial risk. 

[gh17]

DO NOT leave any unpaid.  This does not help you build credit.  Do not generate any interest charges.

You can pay as often as you want, whatever's easiest for you.  10 payments a month, 1 payment a month, doesn't matter.

Just make sure that whatever it says on your bill is the balance, pay that entire balance in full before the due date.

What you read about leaving 1-9% is relevant if you plan to make payments before the bill even comes.  So let's say I make $400 purchases in a month and my limit is $1000.  Before the bill even comes, you can pay off $350, maybe just at the end of each week.  Then the bill comes, and it will say balance of $50, minimum payment of $x due on x date.  PAY THAT ENTIRE $50 before the due date.

To have the highest credit score in a given month, the balance that shows up on your bill should be between 1 and 9% of your limit.  You can charge more than that in a given month as long as that is what the balance is by the time the bill comes.  Then after you get the bill, you pay off the whole thing.

[gh17]

That said, it's by no means required that you always stay under 10% of your limit, but it's a good habit.  So if this month you are at 50% of your limit, but next month you go back to 9% of your limit, your score instantly recovers.  (A history of being under 10% of your limit doesn't do any score-building; your score forgets the history of utilization and only looks at the most current month.)

[Anonymous]

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@Anonymous wrote:
Hello,

I just got disharged from BK7 a few months ago an recently I was pre approved for a Cap One credit card. I applied and was approved for 500 with no interest until june of 2015.

I have a few questions and would like to know if my plan with the card is a good one.

I spend around 100 dollars of groceries a week. I was planning on using the credit card just for my groceries and at the end of the month pay off the card and maybe just leave like maybe 40 dollars left in the credit card that way it is not completely paid off and I can start building credit.

Is this a good idea?

Is it okay to swipe the card every week for 100 dollars for groceries.

Also, i can be paying the card biweekly instead of waiting the month. Does this help.

I want to use the card to rebuild my credit.

Let me know what you guys think.

Thanks

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Just let the statement cut and pay it.