So i was told I was wasting my time😞 jokes aside its okay i can take constructive criticism.
So basically my parent asked me how I was using my credit card. I said “whenever i buy something with the credit card, i usually immediately make the payment/pay it off (on the app ofc with my bank).
I was told youre supposed to let it sit and then set up an auto payment, and then some other stuff idek.
Is this true tho, if i make a payment immediately after purchasing with credit card, it wont boost my credit score as much?
Making payment on credit card right after a purchase
byu/Bulky_Performance_91 inCreditCards
Posted by Bulky_Performance_91
12 Comments
You wait until the monthly statement posts then pay that statement balance in full before the due date. By paying immediately after purchase, you will have a zero balance in the statement and your credit report looks like you are not using the card at all. Listen to your parents.
!basics
What you are doing is meaningless at best and actively harmful to long term credit growth at worst. Credit cards are meant to be used as a revolving line of credit. Pay your statement balance on or before the due date. Anything else is a waste of time and effort.
>Â whenever i buy something with the credit card, i usually immediately make the payment
Do you pay the electric company whenever you turn on a switch? No. It’s the same exact premise here. Credit cards are just another monthly bill like any other.
>Â it wont boost my credit score as much?
Technically speaking, paying immediately and having zero balance reporting is actively hurting and penalizing your score. In the end though, no, how you pay has no long term impact on your credit.Â
Just paying before the due date is all you need to worry about.
First, your credit score doesn’t matter unless you are actively trying to apply for a new loan or credit. So don’t worry about it on a daily basis. Your credit score will naturally fluctuate, so it’s difficult to point to a specific behavior and say, “this definitely caused this score change”.
What you are doing is not necessarily harmful but is also not necessary. “Waste of effort” is subjective, so instead I’ll say that from the perspective of credit limit usage, there’s a couple of concerns:
* You will appear to be using less of your credit limit than if you had waited for a statement. This may make it more difficult to get a credit limit increase.
* You may exceed your credit limit unintentionally, especially if your limit is on the low side. Your credit limit is a monthly measure of how much the bank trusts you. Let’s say you have a credit limit of $1000. If you spend $1000 in a month, immediately pay it off, and then continue spending, you are technically exceeding your limit. This is called credit cycling. How much a bank cares about this will vary, but it is considered risky behavior. At best, they don’t care. At worst, they close your account.
Don’t do this. Wait until you get a bill for it.
It doesn’t matter. Over 800 score, typically pay my cards off weekly.
i do the same. pay it right after i make a purchase. my credit score is 820
Pay the statement balance before the due date. And do not credit cycle.
There’s no benefit to paying immediately after a purchase, unless you’re carrying a balance from month to month, in which case it will save you money on interest. But you can just autopay your statement balance and avoid interest too.
The question no one has asked yet is — why are you paying off your account after every charge? There must be a reason, and I suspect you are misguided.
In most cases the best practice is to pay your statement balance in full before the statement due date. If you have confidence that you will have the funds then auto-pay is the best option. You want to avoid carrying a balance beyond the due date and paying interest. Only charge what you can afford to pay each month.
By paying after every charge your account will report $0 to the credit bureaus each month. You will build credit faster by having a balance reported and paying that off in time each statement period.
Research credit cycling.
Based on your description, you are using the card for a higher limit monthly than what the bank feels comfortable with. Banks will close accounts due to cycling depending on the circumstances.
Use it up to the max if you can afford the amounts immediately, pay off the statement balance once a month after it posts, NEVER be late. Only spending what you can afford helps you never be late.
Rinse and repeat.