When to pay CC

[Anonymous]

It seems there is plenty of conflicting information when it comes to paying cc bill. I have recently begun my journey to rebuilding my credit from chapter 13. I have acquired Cap One Platinum with a 3k limit and Discovered secure. What I have been doing is paying whenever I have a balance on my card essentially making payments multiple times a month. Is this a good thing or bad thing? If so what would be the ideal thing to do.Thanks in advance.

[LuckyB338]

Pay the full statement balance each month on the due date, if the statement balance is the same as current balance buy something around $8 or $10 and let that carry over to next cycle. This way there is a balance reporting and keeps your utilization low. I like to let about 15% utilization report once every few months becuase once you make the payment and bring util. down around 1% your scores get a nice boost.

[NRB525]

If none of your cards is reporting a statement balance, that will hurt your scores. You can pay frequently, but know when your statement cuts and leave a little to report on the statement, then a few days later pay that down. If you choose.

The number one rule is to always make at least the minimum payment by the payment due date shown on the statement every month. Do that and things will be fine, score wise, over the long term.

[MzChrissy]

Credit cards usually don't report balances until the statement closes. Multiple payments in a month is not necessary. I would either set up the accounts to automatic deductions and allow the current balance to be deducted from my account on the due date or pay the balance but leave $1 so that it will report (some accounts don't report if there's a $0 balance). Your statement won't close for 2-3 days after the payment due date and then will report to the creditors. Good luck!

[Anonymous]

Great, thank you for the swift replies.

[SouthJamaica]

---

@Anonymouswrote:

It seems there is plenty of conflicting information when it comes to paying cc bill. I have recently begun my journey to rebuilding my credit from chapter 13. I have acquired Cap One Platinum with a 3k limit and Discovered secure. What I have been doing is paying whenever I have a balance on my card essentially making payments multiple times a month. Is this a good thing or bad thing? If so what would be the ideal thing to do.Thanks in advance.

---

It's fine, but you will get slightly higher FICO 8 scores if you let 1 of the 2 cards report a small balance when the statement cuts, and then pay it off after the statement.

[Anonymous]

IMHO, know your statement closing date... then...

~ Keep overall utilization below 30℅. For purposes of reporting best when between 1% and 9%. Always allow your statement to close with a small balance.

~ If utilization exceeds 30℅ during a cycle, pay down multiple times during the cycle to allow reporting of no more than the above (1℅ - 9℅) at your closing date.

~Avoid interest by PIF anytime AFTER your statement closing date, but not exceed your statement due date.

~In the event that you can not PIF by the due date, pay the minimum amount due.

These core rules are definitely bringing me back from the grave.

Good Luck!

[HeavenOhio]

Just to clarify, "below 30%" means 28.9% or below, and below 9% means 8.9% or below. That's because FICO rounds all fractions up, e.g. 29.000001% turns into 30% and is no longer "below" 30%. In the same vein, a $5 balance will round up to 1%.

Note that some credit monitoring services incorrectly round utilization down. That's totally the fault of the services and isn't a reflection on the scoring model they use. The most misleading is when a small balance is rounded down to 0%. For scoring purposes, that small balance actually rounds up to 1%. Credit Karma and Credit Check Total are among the services that get this wrong.

The reason to post at least $5 is that most banks waive small balances and not bother to bill you. When that happens, a balance of zero is reported. The small balance waiver generally kicks in at a number below $5, but rather than keeping track of each bank's policy, you can figure that $5 is safe. (If you have a BOA Better Balance rewards card, let $10 cut; they've been known to waive $5 balances.)

There are a few reasons to pay several times in a month. The biggie is if you're paying interest. Paying as soon as you can will reduce your average daily balance and thus reduce the next month's interest charge. Another reason is to free up some or all of your limit for more charges, particularly on cards where the limit is low. A third reason is if you're a fussbudget about your budget and like to see things paid ASAP.

[longtimelurker]

---

@HeavenOhio wrote:

There are a few reasons to pay several times in a month. The biggie is if you're paying interest. Paying as soon as you can will reduce your average daily balance and thus reduce the next month's interest charge. Another reason is to free up some or all of your limit for more charges, particularly on cards where the limit is low. A third reason is if you're a fussbudget about your budget and like to see things paid ASAP.

---

Yes.   And also remember the reasons not to:

1) You are voluntarily giving up some of the grace period.   The banks don't need your money till the due date, paying it earlier has an opportunity cost: YOU could be earning interest on it instead of them

2) General cash flow.   Paying "just in time" gives some better protection against unexpected events, where you can redirect some of the cash to more urgent things if the need arises.

You rarely need to optimize your score every month.   This site encourages and rebuilders like to see scores increase, but unless you are apping for something (including CLIs) or something bad has happened that might attract AA, scores don't matter in themselves.

[Anonymous]

HeavenOhio, Longtimelurker..Thank you both for the follow-ups. Very solid points on both ends. Appreciate the wisdom.

~ The rounding scenario is something I was not aware of, and in some cases are a make or break. Or maybe just a break in general.

~ Regarding score optimization. Very true. It's moot unless you're planning for something which isn't a monthly occurrence. Ultimately, it's really about finishing the marathon. Sprint when necessary.