Frequency of Credit Card Payment

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
PaleHorse
Posts: 9
Joined: Tue Feb 05, 2013 10:10 am

Frequency of Credit Card Payment

Post by PaleHorse »

Currently, I pay off my credit card(s) debt in full each month via autopay. We charge everything we can and typically have about a $3k payment a month on approx. $30k spending limit. Is there any reason, credit score or otherwise, why I should make more frequent (twice a month) payments?
kresso
Posts: 22
Joined: Tue Sep 20, 2011 9:58 pm

Re: Frequency of Credit Card Payment

Post by kresso »

If your credit card utilization is 0% it will lower your score, so if you fully payoff and never get a bill you will have a lower credit score than if your bill is 1%-20% of your available balance. You can still pay off everything in full, but if you payoff everything right before you are billed for it, that will lower your score.
fcox85
Posts: 144
Joined: Fri Nov 16, 2012 3:13 pm

Re: Frequency of Credit Card Payment

Post by fcox85 »

kresso wrote:If your credit card utilization is 0% it will lower your score, so if you fully payoff and never get a bill you will have a lower credit score than if your bill is 1%-20% of your available balance. You can still pay off everything in full, but if you payoff everything right before you are billed for it, that will lower your score.
I always understood that utilization was a significant element of your score, but I did not realize that I needed to let a balance remain until a bill was issued for that utilization to be reported. In retrospect, I guess this makes sense. Guess I need to change my CC payment habits to ensure that I don't affect my score.
User avatar
prudent
Moderator
Posts: 9079
Joined: Fri May 20, 2011 2:50 pm

Re: Frequency of Credit Card Payment

Post by prudent »

From a practical standpoint, unless you are over 20%-30% of your credit limit, the impact is small. And unless you are applying for new credit, it is pretty irrelevant.

If I knew I was going to apply for new credit, and I knew a few points difference on my score would be meaningful, I would charge a pittance on my card each month for two months prior to applying, just to have a tiny amount report as a balance (but still pay in full each month).
jeff1949
Posts: 876
Joined: Mon Mar 05, 2007 9:43 am
Location: Salem, OR

Re: Frequency of Credit Card Payment

Post by jeff1949 »

PaleHorse wrote:Currently, I pay off my credit card(s) debt in full each month via autopay. We charge everything we can and typically have about a $3k payment a month on approx. $30k spending limit. Is there any reason, credit score or otherwise, why I should make more frequent (twice a month) payments?
The impact of an extra payment would be either very small or none.

However there may be another good reason to make an additional payment per month. Here is what I do: I get my bill either online or in the mail and then immediately pay online the minimum amount due which is typically $25 to $35. That way if something in the system breaks down and my autopay does not go through on my due date that month the minimum will have aready been paid and the effect on my credit score would negligble or none at all. This scenario has never happened yet but it helps me sleep at night.
Easy Rhino
Posts: 3278
Joined: Sun Aug 05, 2007 11:13 am
Location: San Diego

Re: Frequency of Credit Card Payment

Post by Easy Rhino »

Global credit limit utilization matters more than on one card. So having global utilization at 0% might ever so slightly lower your score, but on individual card's it's fine.

an individual card reporting with a maxed out limit (or even over 50% sometimes) can sometimes lower score a tiny bit.

I wouldn't worry about it though. The only reason I pay a card more than once a month is if I max out the limit and still need to spend more.
Keep It Simple
Posts: 298
Joined: Sat Nov 17, 2007 4:07 pm

Re: Frequency of Credit Card Payment

Post by Keep It Simple »

Easy Rhino wrote:an individual card reporting with a maxed out limit (or even over 50% sometimes) can sometimes lower score a tiny bit. I wouldn't worry about it though.
+1

For all that we hear that maxing out a credit card(then paying it off fully at the end of the month) is devastating to your credit score...where is the proof. Sure, it may temporarily lower your score a few points, but nothing catastrophic. There is much more to the calculation of your credit score than this.

K.I.S.
crowd79
Posts: 640
Joined: Sun Nov 18, 2012 9:37 pm

Re: Frequency of Credit Card Payment

Post by crowd79 »

I am sitting at 90% utilization on one of my credit cards right now, but that's because Ive been charging everything on it for the past yr and only making minimum payments on it while it is at 0% APR. instead I am deferring payments beyond minimum payments to my savings account and making some interest off of it.
Post Reply