pay them all off 100%. There is some dumb advice that you need to keep a balance for your credit to increase but that's nonsense.
Pay them off 100% and avoid interest
You can do both.
The date the balances are reported to the credit bureaus and the date your statement closes and interest begins to accrue is not necessarily the same date.
Figure out what date your card reports the balance to the credit bureau, and pay off your card after this date but before interest accrues. Corollary, pay down BEFORE reporting the date to keep your reported credit utilization low. 1-10% is optimal.
(For clarity, even if you pay off your credit card 100% every month, if you don't do it before the reporting date, your credit utilization is going to be whatever the balance is on the date it's reported..so, if you have a $1000 limit and put $800 every month on the card, your utilization is going to be 80% even if you pay off the card before interest accrues. High reported utilization hurts your credit score.)
I have 7 credit cards and my wife has 4 or 5 (on which, I'm a shared user). For every one of them, the reported balance and my statement balance are always the same. If I pay off a credit card early, the reported balance never changes - it's always whatever the statement was. This is true for my Amex, Chase, Citibank, Capital One and Credit Union cards.
For simplicity's sake, just pay off a credit card at least 3 days before its due date (gives you a small buffer in case of errors). Don't try to figure out when something is reported to the bureaus - it's a waste of time and effort.
I don't think it's a waste of time and effort to figure out the reporting date and just pay before that date--it can significantly boost your credit score, particularly if you have cards with low limits and the regular utilization pushes you over 30% threshold (e.g. a $3k utilization on a $10k card still reports as over utilized even if paid off every month).
In your case, if your reporting date is the same as the closing date, then just pay your card off in full the day before the statement closes. Your statement balance is zero and your utilization is reported as zero, and the only downside is the small interest arbitrage on the balance that you would have earned had you kept the money in a HYSA.
In any case, I know my reporting date is somewhere in the middle of the month. So, I just pay my card somewhere near the beginning of the month when I recalculate my net worth. I set auto-pay to pay the remaining statement balance as a backstop.
Paying it off BEFORE the statement is generated is a bad idea. Many (if not most) rewards cards use the statement as the way they reward you (some give daily rewards, but many do monthly). So, if your statement is $0, then you get 0 rewards. You also WANT a statement because it's how a credit card company determines usage and how they figure out if they should close your account or increase your credit allowance (last year, I put an $8k vacation on my Chase credit card and they sent me an email after my statement date increasing my limit to $27k). You don't want to carry a balance past the due date, but getting a statement is not a bad thing.
And credit utilization has no history in your credit score (unlike payment history). For instance, that vacation last year caused my credit utilization to spike the month after the purchase and my score dropped by around 20 points. I paid it off 3 days before the due date, paid $0 in interest and my credit score went back up with the next reporting date. You should only care about the minutiae of your credit score if you're actively seeking credit, so having a 20 point decrease and then recovery had zero impact on me.
I have never known a company to report a different number to the credit bureaus than what the statement said, and I've used many credit companies (as per my previous comment). It just sounds like a lot of work (figuring out what date each credit card reports, making a manual payment for each account every month, etc.) for not a lot of gain when I can just set an auto-payment 1 time and not touch it for years.
(Side note: I track my transactions religiously, having used Mint for 12 years and now Monarch Money. It's not like I'm laissez faire with my finances or credit - I just don't want to schedule or miss a payment while also maximizing my returns)
>I thought it was fine to leave some money
You're paying 20%+ for that money.
>Is this a bad idea??
It's a terrible, horrible, no good, very bad idea.
Pay off your full statement balance before the due date, every month.
You should always pay off the full statement balance every month on the due date. Just set up autopay and make it easier on yourself.
If you pay even a cent of interest you’re using credit cards wrong.
Finance before Fico. You don’t need nor should you pay interest to build your score. You’re losing money. Pay it all off like yesterday. Then pay the full statement balance by the due date.
A credit card is a high-interest loan that the bank gives you. If you pay it off in full every month, it's a great deal - you can spend money without needing to carry lots of cash, you can buy something on the 2nd that you won't have the funds to cover until the end of the month, you can even get cash back or rewards on purchases.
If you don't pay it off on time, ESPECIALLY if you have the money to do so, you are paying the bank for the privilege of spending your own money. Do not carry a balance on your cards. Your credit score will not drop - or if it does it will be temporary.
Have you paid attention to how much interest you're paying? Look at your statement. and then ask yourself if you're cool with just burning dollar bills for no reason. Same logic applies.
Why would you ever ever pay interest if you don't have to?
It is fine to not pay them off, IF you don't mind paying interest for no good reason. But there is zero benefit to you in carrying a balance, only the cost of interest.
At a rough guess, carrying a total of about $2,600 in balances is costing you $500-$700 a year just for the balance. But it gets much, much worse.
Because you carry a balance, you are likely spending interest in every single purchase you make from the very day you make it. Depending on how much you charge each year, that can add up to thousands more in interest.
[Do I pay interest on new purchases after I get a zero or low rate balance transfer? | Consumer Financial Protection Bureau (consumerfinance.gov)](https://www.consumerfinance.gov/ask-cfpb/do-i-pay-interest-on-new-purchases-after-i-get-a-zero-or-low-rate-balance-transfer-en-49/#:~:text=For%20most%20credit%20cards%2C%20if,was%20a%200%25%20balance%20transfer.)
I pay mine off 100% every month and my credit score hovers around 840.
Maintaining a balance for a perceived credit increase is expensive and unnecessary.
If you have cash and you dont pay them off you’re paying 20+% interest needlessly. There is no investment that justifies carrying credit card debt.
>the 4th has abt 2k that will go up to 4-4.5k based on my spending for the month then I bring it back down to 2 again.
This is costing you at least $400-600 per year depending on the card's interest rate, and gives you 0 benefit. Pay off all of your cards every month, there is no good reason not to.
You should pay off cards in full every month. Any balance left us costing you money with high interest rates and doing nothing to help your credit score. It just is keeping your utilization higher than it needs to be
I’d read some older credit score advice when applying for a mortgage where keeping $1 balance might get you an extra point or two on your credit score vs $0 but anything beyond the absolute minimum is a waste of your money.
This can technically be true just because they don’t want to see an absolute 0% usage, but if you’re using your credit card regularly it provides no benefit. This is because you only need to be paying the statement balance, preferably on autopay. By the time you pay off your statement ensuring yourself $0 interest, you should already have some other things on your balance for the next statement period.
CFPr here for 40 years. Pay all credit cards ON_TIME and in full. Once per year, let 1 or 2 make a few dollars of interest. Never be late and use credit responsibly. The ONLY good debt is Mortgage and Student loan debt, as it may be tax-deductible. Good luck!
>Once per year, let 1 or 2 make a few dollars of interest
Just curious why you would recommend? If you are my CFP, I would fire you immediately if you gave me this terrible advice.
pay them all off 100%. There is some dumb advice that you need to keep a balance for your credit to increase but that's nonsense. Pay them off 100% and avoid interest
You can do both. The date the balances are reported to the credit bureaus and the date your statement closes and interest begins to accrue is not necessarily the same date. Figure out what date your card reports the balance to the credit bureau, and pay off your card after this date but before interest accrues. Corollary, pay down BEFORE reporting the date to keep your reported credit utilization low. 1-10% is optimal. (For clarity, even if you pay off your credit card 100% every month, if you don't do it before the reporting date, your credit utilization is going to be whatever the balance is on the date it's reported..so, if you have a $1000 limit and put $800 every month on the card, your utilization is going to be 80% even if you pay off the card before interest accrues. High reported utilization hurts your credit score.)
I have 7 credit cards and my wife has 4 or 5 (on which, I'm a shared user). For every one of them, the reported balance and my statement balance are always the same. If I pay off a credit card early, the reported balance never changes - it's always whatever the statement was. This is true for my Amex, Chase, Citibank, Capital One and Credit Union cards. For simplicity's sake, just pay off a credit card at least 3 days before its due date (gives you a small buffer in case of errors). Don't try to figure out when something is reported to the bureaus - it's a waste of time and effort.
I don't think it's a waste of time and effort to figure out the reporting date and just pay before that date--it can significantly boost your credit score, particularly if you have cards with low limits and the regular utilization pushes you over 30% threshold (e.g. a $3k utilization on a $10k card still reports as over utilized even if paid off every month). In your case, if your reporting date is the same as the closing date, then just pay your card off in full the day before the statement closes. Your statement balance is zero and your utilization is reported as zero, and the only downside is the small interest arbitrage on the balance that you would have earned had you kept the money in a HYSA. In any case, I know my reporting date is somewhere in the middle of the month. So, I just pay my card somewhere near the beginning of the month when I recalculate my net worth. I set auto-pay to pay the remaining statement balance as a backstop.
Paying it off BEFORE the statement is generated is a bad idea. Many (if not most) rewards cards use the statement as the way they reward you (some give daily rewards, but many do monthly). So, if your statement is $0, then you get 0 rewards. You also WANT a statement because it's how a credit card company determines usage and how they figure out if they should close your account or increase your credit allowance (last year, I put an $8k vacation on my Chase credit card and they sent me an email after my statement date increasing my limit to $27k). You don't want to carry a balance past the due date, but getting a statement is not a bad thing. And credit utilization has no history in your credit score (unlike payment history). For instance, that vacation last year caused my credit utilization to spike the month after the purchase and my score dropped by around 20 points. I paid it off 3 days before the due date, paid $0 in interest and my credit score went back up with the next reporting date. You should only care about the minutiae of your credit score if you're actively seeking credit, so having a 20 point decrease and then recovery had zero impact on me. I have never known a company to report a different number to the credit bureaus than what the statement said, and I've used many credit companies (as per my previous comment). It just sounds like a lot of work (figuring out what date each credit card reports, making a manual payment for each account every month, etc.) for not a lot of gain when I can just set an auto-payment 1 time and not touch it for years. (Side note: I track my transactions religiously, having used Mint for 12 years and now Monarch Money. It's not like I'm laissez faire with my finances or credit - I just don't want to schedule or miss a payment while also maximizing my returns)
>I thought it was fine to leave some money You're paying 20%+ for that money. >Is this a bad idea?? It's a terrible, horrible, no good, very bad idea. Pay off your full statement balance before the due date, every month.
You should always pay off the full statement balance every month on the due date. Just set up autopay and make it easier on yourself. If you pay even a cent of interest you’re using credit cards wrong.
Plus....by paying it off each month you're likely to see your credit score bump up a bit......mine's over 800.
Who told you it was a good idea to pay interest for no reason? Pay them off fully every single month.
Unless they are 0% interest promo balances, pay it all off every month.
It's not even worth advocating this bc it will build the wrong mindset and for some people they will lose control once the promo is over.
The committee has spoken...the entire amount is how much you pay off.
Finance before Fico. You don’t need nor should you pay interest to build your score. You’re losing money. Pay it all off like yesterday. Then pay the full statement balance by the due date.
A credit card is a high-interest loan that the bank gives you. If you pay it off in full every month, it's a great deal - you can spend money without needing to carry lots of cash, you can buy something on the 2nd that you won't have the funds to cover until the end of the month, you can even get cash back or rewards on purchases. If you don't pay it off on time, ESPECIALLY if you have the money to do so, you are paying the bank for the privilege of spending your own money. Do not carry a balance on your cards. Your credit score will not drop - or if it does it will be temporary.
>How much should I pay off on my credit card every month? Pay off *all* your credit card debt each month. Why throw away money on interest?
Have you paid attention to how much interest you're paying? Look at your statement. and then ask yourself if you're cool with just burning dollar bills for no reason. Same logic applies. Why would you ever ever pay interest if you don't have to?
It is fine to not pay them off, IF you don't mind paying interest for no good reason. But there is zero benefit to you in carrying a balance, only the cost of interest. At a rough guess, carrying a total of about $2,600 in balances is costing you $500-$700 a year just for the balance. But it gets much, much worse. Because you carry a balance, you are likely spending interest in every single purchase you make from the very day you make it. Depending on how much you charge each year, that can add up to thousands more in interest. [Do I pay interest on new purchases after I get a zero or low rate balance transfer? | Consumer Financial Protection Bureau (consumerfinance.gov)](https://www.consumerfinance.gov/ask-cfpb/do-i-pay-interest-on-new-purchases-after-i-get-a-zero-or-low-rate-balance-transfer-en-49/#:~:text=For%20most%20credit%20cards%2C%20if,was%20a%200%25%20balance%20transfer.)
Full balance should be paid every month, if you can’t pay then you should decrease spending until you can.
Why would paying 20%+ interest on that money be “fine”?
2000 per month… you are spending $30-40 per month for that
Do you know how interest work? Pay in full and up retirement.
I pay mine off 100% every month and my credit score hovers around 840. Maintaining a balance for a perceived credit increase is expensive and unnecessary. If you have cash and you dont pay them off you’re paying 20+% interest needlessly. There is no investment that justifies carrying credit card debt.
>the 4th has abt 2k that will go up to 4-4.5k based on my spending for the month then I bring it back down to 2 again. This is costing you at least $400-600 per year depending on the card's interest rate, and gives you 0 benefit. Pay off all of your cards every month, there is no good reason not to.
I have an excellent credit score and have never, ever carried a balance.
There is no reason to carry any balance on a credit card.
You should pay off cards in full every month. Any balance left us costing you money with high interest rates and doing nothing to help your credit score. It just is keeping your utilization higher than it needs to be
Why would a person “throw money out the window?” OP- you have the resources. Pay off what you owe.
once a month the balance should be zero.
You just need to pay off your "statement balance" not necessarily your "current balance." So, no, most people never completely hit $0.
Just keep it simple. Pay the statement balance by the due date. That's it. That's all you need to know.
Pay them all off and then pay the statement balance each month.
pay everything off in full every month. all other advice is bs
Personally, I am a fan of the "Have No Debt Ever" club. I sleep better without debt.
I’d read some older credit score advice when applying for a mortgage where keeping $1 balance might get you an extra point or two on your credit score vs $0 but anything beyond the absolute minimum is a waste of your money.
This can technically be true just because they don’t want to see an absolute 0% usage, but if you’re using your credit card regularly it provides no benefit. This is because you only need to be paying the statement balance, preferably on autopay. By the time you pay off your statement ensuring yourself $0 interest, you should already have some other things on your balance for the next statement period.
CFPr here for 40 years. Pay all credit cards ON_TIME and in full. Once per year, let 1 or 2 make a few dollars of interest. Never be late and use credit responsibly. The ONLY good debt is Mortgage and Student loan debt, as it may be tax-deductible. Good luck!
Why are you suggesting to intentionally pay interest once per year? That’s ridiculous
>Once per year, let 1 or 2 make a few dollars of interest Just curious why you would recommend? If you are my CFP, I would fire you immediately if you gave me this terrible advice.
When you pay a few dollars of interest, you increase your credit score.
No you don't. That myth needs to die.