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Question By
biel88

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When should I pay my credit card each month?
I am paying off a lot of debt right now. I have all the payments to come out automatically for the next two months...after November 15th, I'll be free (minus my student loans) of debt. Most of these are going to come off my credit report in 2014/2015, so I am hoping that that alone will increase my credit score.

Right now, my CK score is 561 and FICO is 569. I just got my first credit card in years...the first one I've had in about 5 years. I have gotten so used to paying everything in cash/debit card (plus I was never responsible when I was 18-20 years old), that I've forgotten how to use credit. I was never really taught how to use them.

I now have 2 Capital One credit cards (one with $300, one with $500). My questions are:
1. How soon after I charge something should I pay it off? I am not using these cards for big purchases..I am using them to build my credit history. So, is it to soon to pay the bill the day after I charged something?
2. Is it bad that I have two credit cards from the same bank? They each offer different benefits. My $500 limit card has 1.5% cashback on anything, so that's why I got that one, too.
3. Should I carry a ~20% balance each month or just pay it to $0?
4. Does anyone know when Capital One reports to the credit bureaus? I'd like to pay it down right before they report.

Any advice is appreciated for this girl who has no idea what to do! I feel like this is a game. I'm not really excited about these cards like I used to get. Now, I feel like this is a job.

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Good questions, smart girl!!

Helpful to 2 out of 2 people

You are very smart to ask questions so that your credit score will improve.  You are not the first person I've met who was never taught how to use credit, but you are wise enough and not too proud to ask.

Those student loans are one thing you want to concentrate on paying off as quickly as possible because, unlike other credit accounts, student loans remain collectable until paid off, even for the rest of your life.  They may be having a small impact on your credit for the moment, but let's not worry, as long as you are making regular payments.  Now to get to the questions.

1. Do not make payments on your credit cards immediately after charging.  Why?  You want to show that you can USE credit wisely.  The ideal usage (limit on charges made) is below 20%.  You want to pay the entire AMOUNT DUE as shown on the credit card statement every month before the due date. 

2.  It doesn't matter how many cards you have from the same bank.  If they aren't objecting, there is no problem.  Actually, the credit cards offered by the banks are from major companies and the banks actually get paid for each card that is issued.  But that's not a problem, either.

3. Try to never carry a balance over, because you'll end up paying interest on those charges.  And the interest rate on those cards is a bit steep, isn't it?

4. I don't know when Capital One reports to the credit bureaus, but you do want the positive remarks from proper use of credit cards to show on all credit bureau reports.  Those are the things that make up your credit score, which you want to be as high as possible.

Speaking of credit reports, I hope you have personally checked yours recently.  If not, go to annualcreditreport.com and get copies of all 3 credit reports.  Take the time to look them over very carefully and file disputes over wrong entries (but not things that ARE yours that you don't like) with the credit bureau reporting same.  They then have to investigate and either verify or delete the entry.  You want to check your reports once a year every year because the humans entering th data can, and do, make mistakes and it is up to each of us to make sure OUR information is correct.

Hope this helps.

Reply by
biel88

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Thank you so much for your thorough response. I really appreciate it, and it has helped me understand things better.

I called Capital One and asked them when my statement will be generated. Since this is a brand new account, my first statement be cut until October 16, 2013, and my first payment won't be due until November 16, 2013. I have the money to pay my bill now - ~$170.00. Should I just pay it now? Or should I really wait until the statement comes in October?

Thanks!!

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Wait for it.

It's good you have the money to pay the bill now, but wait for the statement to arrive, then pay "Total Amount Due" as shown on the statement.  Then your credit score will show actual usage, which is good.  You won't be charged interest on this balance unless you don't pay what is due, then anything left WOULD be subject to interest charges in the next billing cycle.

One major thing to remember on credit accounts and that's to NEVER pay just the "minimum amount due" because you will be paying a lot of interest on the account and it will take a long time to pay it off, which is not good.  Play with the "Debt Repayment Calculator" under Financial Tools (see list on the left side of this page) and you can see the real benefit of swift repayment.

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