@bsal wrote:
Hey guys I'm a little confused as to when to make the payment where it will show I only used 10% on a 10k card for example. I was wondering what is the difference between statement due date and the cut date ? For instance if I have a 10k card and I spent 3k on it and my bill isn't due until the 15th, do I quickly pay the 2k before the 15th and let the 1k carry over so it will report that I only used 10% ? Or do I just pay the whole 3k balance off before the 15th? Forgive me in advance if this is a stupid question I just wanna get this thing right so it will report that I'm not using more than 10% when I do decide to use my card
The statement cut date is a synonym for the statement date, and it is almost always the statement balance that is reported, and factored into utilization calculation.
The due date, which is usually from 1 to 7 days prior to the statement date, is the date by which (a) you must pay minimum payment and (b) you must pay off previous statement balance to avoid interest on purchases. It has no bearing on the utilization calculation, but of course it has important consequences financially. Miss that date and you're dead meat... your credit scores would get wrecked.
@Thomas_Thumb wrote:Here are a few things to keep in mind:
1) The cut date is the date when your monthly statement is generated (cut). Whatever shows as a balance on your statement is what is reported to the CRAs. It is this reported balance that is used to compute the cards utilization. [the balance is also part of the aggregate balance - sum of balances across all cards].
2) Due date is the date before which at least the minimum payment must be made to avoid a late fee and possibly a 30 day late - if you forget to pay.
3) It is best to not carry over a balance from a financial perspective - so generalo rule is to pay statement balance in full (PIF) by the due date.
Quite a few posters on MYFico pay down (not necessarily pay off) their balance before a statement cuts. When this is done, then a much smaller balance is reported on the statement - which in turn translates to a lower utilization. Let's use the 10k CL card example:
You accumulate $3k in charges before statement is scheduled to cut
- a) If you allow all charges to report, your utilization computes at 30%
- b) If instead you "prepay" $2.1k of the charges before the statement cuts, then statement will report $0.9k, Now your reported utilization is 9%. Sounds good, right?
- ... well wait a minute, you are not done. Now that the statement has cut, you still have a payment obligation. You MUST pay the minimum amount due (or PIF) to avoid a late fee and a future 30 day late. Whatever is prepaid does not count as a statement payment.
Bottom line, if you prepay before cut date, you need to post ppay after statement issues - so now you need to make 2 monthly payments before/after.
I recommend keeping aggregate utilization (total of all cards combined) under 9% at all times - and to PIF on all statements. On an individual card basis I personally let full balances report and then PIF the balance.
Good luck!
Question, Thomas. I know you recommend keeping utilization under 9%... but how far under 9%? Or does it make no difference at all?
