You need to pay your credit card off IN FULL every month – but do you need to wait for statement?

doriangay

When using a credit card to build your credit score/rating/worthiness, Martin always says pay it off IN FULL every month. 

In order to have positive effects on your credit score, do you need to wait for your credit card statement to be generated and THEN pay it off, or is it okay to spend on the credit card and immediately pay it off?

jlfrs01

Al you need do is instruct the lender to take the full amount by Direct Debit every month. If you prefer to make manual payments then yes, you will have to wait to receive your monthly statement in the post or electronically. No need to pay off each transaction as you make them, it's only necessary to pay in full before or on the payment is due.

doriangay

jlfrs01 said:

Al you need do is instruct the lender to take the full amount by Direct Debit every month. If you prefer to make manual payments then yes, you will have to wait to receive your monthly statement in the post or electronically. No need to pay off each transaction as you make them, it's only necessary to pay in full before or on the payment is due.

Sorry my question isn't clear. 

My preference would be to pay it off manually as soon as I make each transaction. 

But I don't know if that will limit or prevent positive impacts on my credit score(s). 

For credit scores - is it better to wait until a statement is generated and then pay off in full (whether automatically or manually) or can I still improve my credit score when manually paying it off immediately? 

MorningcoffeeIV

Ignore your credit score. It's not a thing.

For a decent history, just use your card as it should be used - spend, then pay each statement in full.

doriangay

MorningcoffeeIV said:

Ignore your credit score. It's not a thing.

For a decent history, just use your card as it should be used - spend, then pay each statement in full.

Yes I know what Martin says about credit scores, just using the term as a shorthand here. 

I clarified my question in a follow up comment

Kat78MFW

You could make a manual payment into an easy access top savings account each time you use the credit card. That way you can earn a bit of extra interest and all the money is ready when the full payment is due.

Brie

On your credit history (which is the crucial thing) your credit card balance is shown each month.  So if you haven't paid everything there will be the statement balance.  But if you are meeting your obligation of paying the required minimum your credit history will log this as green.  If you miss a payment one month it will likely change to yellow and if you stop paying at all it will go red.  So simple traffic light system.

If you have a balance and are paying it off slowly then the balance will show is getting lower each month and so will likely show as green.  

If you spend £5 and then pay £5 you should expect a zero balance but there will always be a bit of a delay between so you're likely to have months when there's a balance showing on the history and maybe other months where there isn't.  But it will all be green and that's what matters.

Most people do stick to the pay after the statement is received to ensure they get the maximum number of days free credit.  I like to have cards' DDs  set at either the full statement amount but have also had set amounts so I know exactly how much might be coming out of the bank (just on balance transfer cards) or minimum DDs to ensure I don't get whacked with any fines but then decide precisely what day I want to pay the rest off.  All methods work equally well. 

The thing to watch out for is having too much credit or mixing up cards which you are using for balance transfers and then running up interest as a result.  

Nasqueron

If you pay off the money straight after spending, there is no point having a credit card (except for transactions where S75 would apply) - you might as well get a debit card that pays cashback! By paying off the amount after spending, when you get a statement it could well be zero (no debt on the day the statement was created) so it looks like you are not spending, therefore it would appear to not be used to other lenders.

The best way to build a solid credit history is to spend on it, wait until the statement is created, then pay by direct debit in full (or if you must do it manually, 4-5 working days before due date and always have a DD setup for the minimum just in case you are incapacitated or unable to pay e.g. on holiday and no wifi). Put the money you were paying each time into an account like Kroo where you get interest on the current account and then pay it off from there - that way you don't have the temptation to spend the money before month end

MrFrugalFever

I always allow the statement to poll with my balance on the credit card and then I will pay the statement balance in full approx 2 days prior to date on statement. The money I use to pay off my CC would then have been sat in my Savings account for up to a month if not longer earning interest. 

You have to be disciplined to do this and ensure you do not miss a payment. I also find that you are effectively spending a month in advance so you need to ensure that you are on point with your budgeting!

simax

I echo the above. If you spent, say £200 on your card then immediately paid the card company back £200 then when the statement is produced they’ll report your balance as £0 on the statement date, hence showing no usage.

Use the card, then put the money aside in a savings account, wait for the statement to be generated then pay it off afterwards.

km1500

yes you can pay any amount into your credit card at any time to pay off transactions or whatever just as long as of course you don't send the card into a positive balance

separate to this, you must pay the statement balance (if any) by the date due

if the statement balances zero it will be recorded as such at the credit agencies and the inference will be that you haven't used the card - for example they will not know that you spent a thousand and paid off a thousand