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Best way to pay on a credit card

Contributor

Best way to pay on a credit card

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement?  Just want to make sure I am going about it the right way to best help my credit score. Thank you all!

Starting over. Current Score through Chase banking as of 10/31/18 is 564. 0 credit cards.
Message 1 of 33
32 REPLIES
Valued Contributor

Re: Best way to pay on a credit card

Don't pay it until you get the statement.  Then pay the statement balance in full via a "pull" transaction from the credit card's website.

Chase Sapphire Reserve • PenFed Power Cash Rewards • and five cards in the sock drawer

No CC debt • No bonus chasing • No app sprees • No gift cards • No AZEO • No airline incidentals • No hotel cards • No store cards • No business cards • No authorized users
Message 2 of 33
New Contributor

Re: Best way to pay on a credit card

@Erika3o3 wrote:

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement?  Just want to make sure I am going about it the right way to best help my credit score. Thank you all!


The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me. 

 

I always pay down my cards to optimal utilization before the statement cuts and then PIF when I get the statement and put new charges on. 


Starting Score: 647
Current Score: 647
Goal Score:700

Take the myFICO Fitness Challenge


My Cards: Cap1 Plat (PC'd to QS) $8,250, SSFCU Power Cash Rewards WMC - $5,000, Discover It - $7,500, NFCU cashRewards - $7,500, BBVA Compass ClearPoints - $2,000

Goal: cashRewards CLI to $7,500 and then garden! Garden time!
Message 3 of 33
Valued Contributor

Re: Best way to pay on a credit card


@Saeren wrote:

@Erika3o3 wrote:

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement?  Just want to make sure I am going about it the right way to best help my credit score. Thank you all!


The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me. 


That sounds too much like a myFICO Forums gimmick.  Why not do it the way the bank expects you to do it?  That's how you build trust with the bank.

Chase Sapphire Reserve • PenFed Power Cash Rewards • and five cards in the sock drawer

No CC debt • No bonus chasing • No app sprees • No gift cards • No AZEO • No airline incidentals • No hotel cards • No store cards • No business cards • No authorized users
Message 4 of 33
New Contributor

Re: Best way to pay on a credit card

@UpperNwGuy wrote:

@Saeren wrote:

@Erika3o3 wrote:

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement?  Just want to make sure I am going about it the right way to best help my credit score. Thank you all!


The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me. 


That sounds too much like a myFICO Forums gimmick.  Why not do it the way the bank expects you to do it?  That's how you build trust with the bank.


Because optimally you would get your score high enough to add a second card with more favorable terms and a usable limit and the quickest way to do that is to keep your utilization reported low. 

 

Also these low low limit cards, the banks fully expect you to have odd payment behavior. There isn’t much you can do with such a low limit so the most appealing customers for them are going to be the ones who put lots of spend and thus multiple payments on the card. 


Starting Score: 647
Current Score: 647
Goal Score:700

Take the myFICO Fitness Challenge


My Cards: Cap1 Plat (PC'd to QS) $8,250, SSFCU Power Cash Rewards WMC - $5,000, Discover It - $7,500, NFCU cashRewards - $7,500, BBVA Compass ClearPoints - $2,000

Goal: cashRewards CLI to $7,500 and then garden! Garden time!
Message 5 of 33
Valued Contributor

Re: Best way to pay on a credit card

It really depends on what you're looking to do.

 

1. It comes with nice rewards (don't know if Discover IT secured comes with rewards) that you can benefit from - Pay the balance off weekly so you can charge more on it, rinse and repeat but leave some balance to report to the statement, make sure to pay off the remaining "statement balance" by due date to avoid interest.

 

2. Using it for immediate scoring boost for upcoming credit application - Pay off most before statement date but allow a balance of < 8.9% to report to statement, pay off the rest by due date.

 

3. Using it for profile rebuilding with no immediate credit application on the horizon - let everything report to statement then set your autopy to pay the full statement balance by due date.

Message 6 of 33
Regular Contributor

Re: Best way to pay on a credit card


@UpperNwGuy wrote:


That sounds too much like a myFICO Forums gimmick.  Why not do it the way the bank expects you to do it?  That's how you build trust with the bank.


Banks, or in this case lending institutions, like to see responsible use over time. In this case, with a $200 limit, having a higher utilization percentage may not be the end of the world, but it's easier to develop good habits early than it is to break bad ones later. Plus, when it comes time for limit inreases, and card graduation, they will look at the overall pattern to get an idea of the behavior they can expect when the limit increases to $2000, or even $20000 over time.

 

I would definitely pay a big portion of it down and let the statement report a smaller balance for the reason above, but also because there are instances when you first link your bank account, they can limit your ability to pull multiple payments in a statement period. Granted, you can work around that by pushing the payments from your bank, but it is far easier to just pay from the Discover site or app. With a $200 limit, that will likely be something that you want to be able to do as soon as possible. I'm not 100% sure that Discover does this, but I know with Chase and Amex I had that issue.

 

Also, congrats @Erika3o3 on putting in the effort to get off on the right foot.

Message 7 of 33
Valued Member

Re: Best way to pay on a credit card

I'm in the same boat. I have a new Discover it secured card with a $200.
I stalked the graduation threads, as well as other credit card threads before getting it. You're reported utilization is really important but you still want to use your card and squeeze the most out of the cashback rewards.
I use mine as my mainstay for gas and dining out (because those are the highest cashback categories). I make a payment at least once a week (I consider it more of an atm card for now), so that I always have enough available and can get it down to under 8% right before the statement cuts. Then, when the statement cuts, I pay in full. My cashback for last month was just under $4.00, not bad for a $200 credit limit.
Message 8 of 33
Frequent Contributor

Re: Best way to pay on a credit card

Like the other poster said,

Make a payment to get it below 8.9% (or at least below 30%). Then pay the remaining balance in full when the statement cuts (PIF).

Explanation: The bank will see your usage. All of it. The 8.9% is not for the bank, but for the credit bureau. This way you are building trust with your bank AND the credit bureaus (i.e. improving your credit at the same time). Banks typically report on your statement date.


Message 9 of 33
Valued Contributor

Re: Best way to pay on a credit card

Make sure you turn on the auto pay for the minimum payment due so you do not miss a payment.

Make sure you always have the minimum payment available in your checking account so you don't bounce said payment.

 

Also, as others have said, pay down that balance to around $10 so that that is the balance that reports. The point is not to let the card report you using 90% of your credit line which would be easy to do with the current credit line.

Message 10 of 33