Overpaying credit card on purpose

pupgrum

My statement was available on 22/06 at £80, and I have around £40 spent after the statement came out. I'm due to pay the statement by 22/07, and should receive my next statement for the £40 around 22/07 if I don't spend more.

I'm thinking of overpaying, say £115 before the due date in July. On my credit report I'm guessing it'll say my credit card usage is £80 for June and £5 for July. Is this a good way to improve credit rating? I know both Experian and Equifax scores you better if you have a lower usage of your credit card.

dresdendave

Unless you are close to your limit, which seems unlikely based on the figures quoted, can't see any point overpaying.
Just pay the statemented amount in full and on time every month and your rating will improve over time.

[Deleted User]

Agree. I can see a couple of potential downsides, but I can't see any benefits.

pupgrum

You're saying there's no benefit in having a lower debt to credit ratio? I know Experian scores you better if you use less than 10% of your limit, and even lower if you use less than 5% of your credit card limit. If I overpay this month instead of paying £40, I'm only paying £5 and it should show up as £5 usage in my credit report instead of £40.

[Deleted User]

No. It's irrelevant at that level.

dresdendave

My turn to reciprocate and agree with ZX81.


If you had, for example a £10k limit and were using £9k+ it would probably raise a few red flags, but at the relatively low amounts you are quoting, just pay as per each monthly statement to avoid any complications.

speedy9764

Also be aware that each month you pay less than the full statement balance you will still be paying interest. So if possible pay it off in full. The first time you pay off in full you will see a small amount of "residual" interest, this is the interest on the outstanding balance from the statement date to the date the cleared funds arrive in your account. One other thing to consider is that if you overpay a large amount, say you are wishing to make a large purchase that is over your available limit, so you put extra on your card. Any "credit" amount is not covered by the credit card company in the event of fraud on your card.