Credit card clarification.

piehole

Hello,

I'm trying to figure out how the credit card minimum payment relates to statement date, so that I know when it is 'safe' to start spending money on the card, again.

I'm not sure how to put it more eloquently than that, so i'll just give an example.

My Vanquis card, was £205 / £250 in debt, at the end of the last statement. I fully paid this debt off, in the middle of the month, leaving me £250 available (On a separate note, there is currently a £1 authorisation charge placed on the card by Amazon, leaving £249 available. Does this count as the card not being paid off in full?)

The 'payment due date' was the 27th, with the latest statement being due on the 1st of August. When would it be 'safe**' to spend on this card? (I'm probably still missing something about the whole interest thing. In my mind, I imagine it as a binary system, where my debt is either clear, or outstanding, is that correct? I.E, I won't pay interest on anything, if I clear the debt, but if I don't clear it, i'll pay whatever was in my balance at the time of the last statement?)

I'm still pretty green to all of this. I had a very spotty credit based past in my 20's, and this time, i'm trying to do things right.

**Safe meaning, purchasing something, and then paying it off before next statement date.

grumbler

piehole wrote: »

I'm trying to figure out how the credit card minimum payment relates to statement date, so that I know when it is 'safe' to start spending money on the card, again.

I'm not sure how to put it more eloquently than that, so i'll just give an example.

My Vanquis card, was £205 / £250 in debt, at the end of the last statement. I fully paid this debt off, in the middle of the month, leaving me £250 available (On a separate note, there is currently a £1 authorisation charge placed on the card by Amazon, leaving £249 available. Does this count as the card not being paid off in full?)

Yes, if the payment was made after the statement was produced.

The 'payment due date' was the 27th, with the latest statement being due on the 1st of August. When would it be 'safe**' to spend on this card?

As soon as your payment cleared and the available credit increased.

(I'm probably still missing something about the whole interest thing. In my mind, I imagine it as a binary system, where my debt is either clear, or outstanding, is that correct?

Seems to be.

I.E, I won't pay interest on anything, if I clear the debt, but if I don't clear it, i'll pay whatever was in my balance at the time of the last statement?)

The interest is calculated on daily basis on all transaction. It is waived for purchases if the statement balance is paid in full and before the due date. Otherwise it's added to the next statement.

piehole

Thank you for taking the time to reply, grumbler.

The balance was paid on the 11th of this month, and has been cleared for 2 weeks. Am I correct in believing that because the payment due date has passed (with the new statement due in 2 days), I can now use this card to pay for my purchases, again, without causing it to cost me the full amount in interest?

I get paid bi-weekly, so using it at the start of the month, gives me two pay days to get it paid off, in full. It works great for how I use it, now. Though, I do have the money to pay for the purchases I make on it, now. I've picked up a lot of tips from this forum, my favourite being to transfer the amount i'm due to pay, in to a savings account, until right before it's due!

Just to clarify on the Amazon issue. It's an authorisation charge only, it was placed to check the card against a return (without me authorising the charge, I may add). It was placed on the 25th, and I would hope it had dropped off by now, but alas, it hasn't. Is that still likely to affect the 'paid off in full' you talked about?

Candyapple

Why not set up a DD to clear the entire balance monthly? Otherwise with you making manual payments to clear your balance, it will likely show on your credit files as you not using the card as there is never a balance to report which in turn affects you negatively as any potential lender will not be able to see your repayment history.

piehole

I held off on setting up a DD for full payment, in case I had a bad month, and needed to sit on minimum, really.

I had no idea that paying it back manually, would affect how it's reported to the credit bureaus, though, is that absolutely correct?

How would say, paying the minimum via DD, and paying the minimum via Debit Card online, affect reporting, if both were paid on the same day? (Around 3 days before due)

Edit:

I think I get what you're saying. If I buy something on the card, then immediately pay it back, that's likely to show a 0 balance, right? I generally buy something on it, then transfer that money to a savings account, then pay the card 3-5 days before the due date (bar this month, where I paid it early, because I wasn't as learned as I am now!)

molerat

Correct. Paying off the card before the statement is produced will have a £0 usage reported to the credit agencies as it shows historical statement balance and payments. Paying off in full the day after the statement is produced will give a £x use and payment report to the agencies. Obviously it is more difficult to juggle when you have such a low limit.

piehole

So, if I understand right, i'm better off spending money on the card, now, before the latest statement is produced, or, i'll essentially get a £0 usage reported on the credit file?

So, if I understand correctly, paying the balance off in full, has to be done before the 'payment due date' and NOT the statement date?

Thank you for the help.

Ebe_Scrooge

piehole wrote: »

So, if I understand correctly, paying the balance off in full, has to be done before the 'payment due date' and NOT the statement date?

Thank you for the help.

Correct. You must pay it off before the "Payment Due" date, but after the statement is produced. Normally, when you receive your statement, the payment due date is typically a couple of weeks after your receive the statement, so you have plenty of time to pay it.


Doing it this way shows to potential future lenders that you spend wisely and are good at repaying your debts and managing your money - which is what counts when you're looking for any form of credit.