Credit Card Balance question

[recentcollegegrad]

Hi....I feel dumb asking this, as I consider myself pretty financially smart...but in college, whenever my credit card closed for the month, I instantly paid off the balance in full.

Now that I am working and making "money" (above minimum wage/college summer job pay), I still pay the balance in full but wait until 2-3 days before the due date to do so.

So, for example, if the cycle ends on 10/1 and the balance is $1,000, and payment (to avoid late penalty) is due by 11/1. If I wait all of October and pay the full balance, on, say 10/29, am I hurting my credit score by doing so? Is it any better, from a "creditor/credit score" perspective, to pay the balance in full ASAP once the cycle closes on 10/1?

My rationale is that...I'd rather hang on to the cash as long as possible (even though I could pay instantly) just because it makes more financial sense (ie, to earn interest (albeit minimal) on the balance in my checking/savings/whatever for the whole month.

Thanks!

[snafu]

If you review your CC statement you will notice there is a Billing date, often referred to as closing date that details all purchases since the previous statement. The Due date is typically about 21 days following Billing date. The Due date is rarely aligned with pay dates.

To avoid interest or fees or charges it is imperative that your payment is acknowledged by the CC 2-3 business days prior to Due date. If you pay your bills electronically, your bank deletes the payment sum immediately, however the CC seems to acknowledge payment 2-3 business days later. You can verify the payment on CC on-line.

Holidays, Saturday and Sunday are not business days. The CC companies likely make a significant profit for that float of unacknowledged payments for millions and millions of clients. If your payment in full is not received and processed by the Due date, you will be charged interest for every day since initial purchase of each item.

Should you plan to make an expensive purchase, I suggest you make that purchase 2-3 days following the Billing cycle date. The item will not show due until the following billing cycle.

[cooliemae]

It really depends on the particular credit card company when it comes to weekends and holidays. Most of my credit cards can be paid any day of the week. I always schedule my payments the day before the due date to maximize the use of my money.

Companies differ, but some also have a grace period when which not incur a finance charge. On the rare occasion I've missed a due date, I've been able to call the company and pay immediately with no penalty.

[MonkeyMama]

Originally Posted by recentcollegegrad

So, for example, if the cycle ends on 10/1 and the balance is $1,000, and payment (to avoid late penalty) is due by 11/1. If I wait all of October and pay the full balance, on, say 10/29, am I hurting my credit score by doing so? Is it any better, from a "creditor/credit score" perspective, to pay the balance in full ASAP once the cycle closes on 10/1?

Thanks!

Whether you pay close to 10/1 or 10/29 (as per example) should make absolutely no difference to your credit score. I personally pay a few days before the due date.

[disneysteve]

Originally Posted by MonkeyMama

Whether you pay close to 10/1 or 10/29 (as per example) should make absolutely no difference to your credit score. I personally pay a few days before the due date.

I agree. Paying anytime during the grace period is fine. The trouble starts when you pay after the due date.

The other problem, unrelated to the date, is how much you charge. You should never charge more than 30% of your credit line. That will affect your score. So if you have a $5,000 line, don't charge more than $1,500, for example.

[naomibatac]

It is important that you pay on or before the due day in order not to be charged with finance charges and other penalties.