Paying off your credit card early?

Legacy_user

Hi, I'm new to this forum so I'm not sure if I'm posting this question in the right place, if I'm not I apologise.

I currently have a credit card with a credit limit of £200, and have set up a direct debit to pay off the full balance each month. My question is, If I run up the credit card to £150, then pay off the £150 before payment is due, as my balance now returns to £0, does that mean I can spend the full amount again, and pay it off again as many times as I would like before payment is due? And if so does this change my credit score in any way?

[Deleted User]

Correct. You can fill up and pay off the credit card as many times as you like.

Sncjw

I wouldn’t pay it off before the due date as if makea it look like your not using it.

Also as it takes a few days to clear paying it off then spending then paying it off and spending straight away could make you go I’ve rrne limit

fwor

hashimtmahmood wrote: »

my balance now returns to £0, does that mean I can spend the full amount again

It's not quite that simple, because at the point that you pay off the current balance it's quite possible that you will have transactions that are "pending", for one of a couple of reasons.

They will need to be paid for in the following month and will almost certainly reduce the maximum that you can spend in that month. So it's always best to look online to see what the CC reckons your current balance is.

MisterBaxter

With such a low credit limit wouldn't you be better off just spending around £150 per month on it (just to make sure you never exceed your limit), pay it off in full each month and then just use your debit card once you hit the £150 limit. All you need to be doing to build up a good credit history if prove that you can use your card sensibly and you'll do that by spending within the limit, and paying off once billed, if you have a £0 balance at the time of billing it may look on you credit report as though you aren't using the card.

With such a small credit limit you aren't going to be putting high-cost items on it and a repeated pay/spend cycle seems like an unecessary effort and also risks you going over your limit.

Terry_Towelling

Your credit score is irrelevant - you are the only person who will ever see it. It is simply a tool that the Credit Score providers use to try and get you to take out credit products via them. They undoubtedly get a commission if you do - how else are they going to cover the costs of operating their service?

To answer your question, yes, you can make payments towards your card account whenever you like and re-spend on the card once your payment has been applied - the only condition is that you must pay at least the minimum asked for on your statement between the statement date and the payment due date.

You have stated that you will be paying the full balance by direct debit each month - that is good but there is something that you might need to consider if you are planning on making extra payments. When you set your account to collect the full balance by direct debit, some card providers will always collect the full balance that was shown on your statement at the time it was produced. Check your T&Cs to see if yours is one of them.

So if you got a statement for, say, £150 and then paid £100 a week or so later, your card provider would still collect the full £150 that showed on the statement. That needn't be a problem but you would need to make sure that you actually have £150 in the bank account that you are using to fund the direct debit.

If this scenario did happen, your credit card account would either go into credit, or the 'overpayment' would go towards clearing off any new spending you have made since the statement was produced.

Jami74

hashimtmahmood wrote: »

H My question is, If I run up the credit card to £150, then pay off the £150 before payment is due, as my balance now returns to £0, does that mean I can spend the full amount again, and pay it off again as many times as I would like before payment is due? And if so does this change my credit score in any way?

I did get a little close to my limit on one credit card once so paid a chunk off, then a few days later spent again. Even though the payment in was shown as cleared I still got a charge of £12 for going over my limit in my next statement. A couple of months later I received an apology letter and the £12 was refunded. It did not show up on the CRA reports.

sleepyjones

I wondered this same question because that's exactly what I've been doing. I'll use my card for everything I buy (pretty much) and then just pay it all off when I get to around 75% of the limit (Which is generally a couple of times a month).

I was conflicted, thinking

1) To the card people, they'll see I'm using the card a lot and paying it off multiple times a month, so they can see that I really need an increased limit because there would be high usage on the card ... or it might trigger the system to suggest a limit increase
or
2) It looks like your dependant on the card because you use it so often, which might be detrimental to getting an increase.

It's a tricky business this credit worthiness thing.

[Deleted User]

You're only seen as dependent on the card if you're not clearing in full each month and incurring interest.

Otherwise you're simply using it in place of your debit card, which is perfectly sensible.

Terry_Towelling

Sleepyjones, why don't you ask your card company for a limit increase? If your answer is 'because I'm worried about the impact it will have on my credit score', then the next question is 'why'?

PixelPound

your credit report may show both statement balance plus how much was spent and how much paid off. Doesn't show interest paid, so if using the card and paying it off a few times a month it will show in the totals.

If you have had the card for 6 months or more then it wouldn't harm asking for a limit increase, then can only say no and it shouldn't affect your score since most providers would only do a soft search as its not a new application.