What to pay and when?

[ssc2761]

Ok now that I have a credit card, I have a question regarding payments on the credit card. I charged $7.60 and then my statement came out with minimum payment due of $7.60 as that is all I had charged up to that point. After the statement comes out, I have charged some additional money on the card and total is now $20.45. Do I just pay the $7.60 because that is the statement balance or do I pay the full $20.45? I am worried about when the card reports to the bureaus each month. Isn't it better to pay the statement balance in full each month? Or should I pay the balance in full each time I charge something? Thanks all for any help on this.

[free2breathe]

You can do it either way. If you pay the $7.60, the remainder will show on your next billing cycle, and you can pay it in full again at that time. Or, if you want, you can pay the entire balance, rather than balance due. Either way, you won't get a finance charge on the difference between the $7.60 and the $20.45 at this point. If and when we ever get a credit card again, I will choose two times a month to pay my balance in full. I don't want to get stuck in the finance charge trap ever again.

[Logan]

This is debated all the time. My belief from personal experience (loan officer) and articles I've read it is better in your case to pay the $7.60 and then the remaining when that part is due. If you pay it all now you're next statement balance will be 0 and while you get a paid as agreed you're not showing that you owed anything on your credit card.

The more important thing is to make sure you keep the balances ideally below 10% and definitely below 30%.

While I say this I personally would not over think things and just make sure you pay your bills on time and your credit will improve. Also, when you're 3 years out of BK like me you're going to find that the limiting factor for obtaining credit is finding a BK friendly lender not your credit score.

You're about to get contradicting advice but just pay those bills on time and your credit will improve.

Logan

[IBroke]

When it comes to credit-reporting, my personal experience is that you want to have a reported balance of 3% of your credit-line. Yes, just 3%. While 10% certainly doesn't hurt, it's already too much for the maximum "score-boost". What you pay every month is actually not the deciding factor - and here's why: The majority of companies report your STATEMENT-balance to the bureaus - so when you are asking yourself if you should pay the minimum-amount due or the entire balance, the reporting already took place. I'd say you should check your reported balance with the credit-bureaus and compare it to the statement-balance. If it's identical, you know when they are reporting.

You need to plan ahead. You can achieve that by paying of the entire open balance and only spend the 3% of the available credit until the billing-cycle closes.

Now keep in mind: THERE IS NO NEED TO DO THAT EVERY MONTH - especially not if it's a CC with a low credit-line. If it's a higher limit, it's a different story because interest comes into play and you don't want to run up high debt. As long as you make your minimum payment, the account won't hurt your credit in the long run. I have 2 small cards with a $300 credit-line and they are basically maxed out every month. Now, if I know I'm going to apply for credit in the near future, I simply bring the accounts to their optimum level until I finished my credit-applications. As I said, the trick is being aware of the reporting-date.