Should I pay half a large balance this month before I get my CC statement?
Utilization is near real-time. What that means is that what is reported is what is taken in terms of debt-to-income (DTI) ratios. When a mortgage broker pulls your credit, they will pull the latest balances with the minimum payments. This is what is taken to determine DTI along with your gross monthly income. If you do not pay your account in full before the statement date, then you more than likely will have to wait an additional statement cycle before it reports to the credit bureaus. Therefore, your utilization is dynamic and the history of your utilization month-to-month is not recorded forever. Only the current balance. What is maintained and reported is your payment history. So you want to never be late if you want to be approved anytime soon for a mortgage. A lower DTI will not help your interest rate. As long as you stay away from the maximum DTI for the mortgage vehicle you are attempting to be approved for (VA, FHA, Conventional, etc), then your DTI should not be a concern. If you are borderline at the time of underwriting, you can take the opportunity and pay off the balances. The mortgage company can then do what is called a credit supplement which entails contacting those lenders where you have proven you have a zero balance and manually input the zero balance cards, that have not yet reported to the bureaus, in your final application to the mortgage company for underwriting approval. This can make a difference of a few points. When your balance is reported on a monthly basis to the bureaus that current balance is used to determine your utilization. Keeping it paid down will  help in this case. If you are monitoring your credit regularly, you can see what time of the month your balance is reported and pay before then (just make sure you include enough padding to be sure your payment clears before the reporting date--normally only a business day or so, but weekends can throw it all off). From what I have heard on Clark Howard if you pay your balance off before the statement's closing date it will help your utilization score.  He has had callers confirm this but I don't have first hand knowledge for this to be true.   Also this will take two months to make the difference.  So it will be boarder line if you will get the benefit in time.   Sign up for credit karma if you like.  You can get suggestions on how to help your score. It will reduce the credit ding you will take but why does it matter?  Next cycle when it's paid off your credit score will go back to where it was.  Unless you're looking for a loan right now and your credit is marginal why worry about it?
"In the US, if your monthly statement was issued by the credit card company on January 1 and it showed a balance of $1000, then a payment must be made towards that balance by January 25 or so, not February 1 as you say, to keep the card in good standing. The minimum payment required to keep the card in good standing is specified in your monthly statement, and failure to meet this requirement can trigger various consequences such as an increase in the interest rate charged by the credit card company. With regard to interest charges, whether your purchase of $2000 on  January 3 is charged interest or not depends entirely on what happened the previous two months.  If you had paid both your monthly statements dated November 1 and December 1 of the previous year in full by the their respective due dates of November 25 and December 25, and the $1000 balance on the January 1 statement is entirely due to purchases (no cash advances) made in December, then you will not be charged interest on your January purchase of $2000 as long as you pay it off in full by February 25 (the charge will appear on your February 1 statement). But, if you had not paid your December 1 statement in full by December 25, then that $1000 billed to you on January 1 will include  purchases made during December finance charges on the unpaid balance from the previous month  plus finance charges on the purchases made during December. The finance charges will continue to accumulate during January until such time as you pay off the bill in full (these charges will appear on your February 1 statement), hopefully by the due date of January 25. But even if you pay off that $1000 in full on January 25, your charge of $2000 on January 3 will start to accumulate finance charges as of the day it hits the account and these finance charges will appear on your February 1 statement.  If you paid off that $1000 on January 10, say, then maybe there will be no further finance charges on the $2000 purchase on January 3 after January 10 but now we are getting into the real fine print of what your credit card agreement says. Ditto for the case when you pay off that $1000 on January 2 and made the $2000 charge on January 3. You most likely will not be charged interest on that $2000 charge but again it depends on the fine print. For example, it might say that you will be charged interest on the average of the daily balances for January, but will not be charged interest on purchases during the February cycle (unless you miss the February 25 payment and the whole cycle starts all over again). As a general rule, it takes two monthly cycles of payment in full by the due date before one gets into the state of no finance charges for new purchases and effectively an ""interest-free"" loan of $2000 from January 3 (date of purchase) till February 25 (due date of payment).  Matters become more complicated when cash advances are taken from a credit card which are charged interest from the day they are taken but don't trigger finance charges on new purchases or the so-called ""zero percent balance transfer offers"" are accepted." No. It's the total on the bill statement that's reported, not the daily value. Pay before the bill is cut and you are fine. This is a great strategy for those who find their line to be too low.  Update - when I answered this, it was true, and pretty much went unchallenged. Some months back, a card I use changed banks. And my score blipped down. I had been on the habit of paying most of my balance in full the day of, or day before the statement was cut. I saw the balance reported on this card was as of the last day of the month, not the amount billed. I started paying the card's full balance on the 30/31 and the score returned to normal. This was the first I'd ever seen this, and no other member here has shared the same experience, yet. "I think your confusion comes from the negative impact when a creditor writes off your bad credit and ceases attempting to collect it. ""Chargebacks"" as you call them are an attempt to undo fraudulent charges on your card, whether from stolen credit card info or from a merchant who is using shady business practices. For what it's worth, if you joined on December 20, January 20 seems like a reasonable date for the next billing cycle, with the December 31 date reflecting the fact that their system couldn't automatically bill you the day you joined. I also think it's reasonable for you to ask them to refund the bill for the second month if you do not plan to use their gym further. So the dispute seems like a reasonable one on both sides. Good luck." Remember that if you make charges as the starting of your billing cycle, then you are receiving a free ~60-day loan. For those that are able to receive high interest rates on their, this means a greater opportunity to earn on their money. For example: Your billing statement ends on Jan 5th. On Jan 6th, you max out your credit card. Your billing statement ends on Feb 5th. Depending on your credit card, your grace period can be anywhere from 20 to 30 days. If your bill is due Mar 7th, you just gave yourself a free 60 day loan. If you have multiple credit cards with different due dates and long grace periods, you can rotate which cards you max out to optimize the money you keep in savings. "There are always little tricks you can play with your credit card. For example, the due date of your statement balance is not really set in stone as your bank would like you to believe. Banks have a TOS where they can make you liable to pay interest from the statement generation date (which is a good 25 days before your due date) on your balance, if you don't pay off your balance by your due date. However, you can choose to not pay your balance by your due date upto 30 days and they will not report your late payment to credit agencies. If they ask you to pay interest, you can negotiate yourself out of it as well (although not sure if it will work every-time if you make it a habit!) Be careful though: not all banks report your credit utilization based on your statement balance! DCU for example, reports your credit utilization based on your end-of-the-month balance. This can affect your short term credit score (history?) and mess around with your chances of pulling off these tricks with the bank CSRs. These ""little tricks"" can effectively net you more than 60 days of interest free loans, but I am not sure if anyone will condone this as a habit, especially on this website :-)" "I too am a full-monthly-statement-balance payer and I received a balance transfer offer from my credit-card company. This one was quite different from many others that I have read about on this forum. I could do a balance transfer for any amount up to $X from another credit card, or use the enclosed ""checks"" to pay  some other (non-credit-card) bills, and I would not have to pay any interest for 12 months on the amount thus borrowed.  But, There would be a 2% service charge on the amount I was borrowing. This amount would be billed on the next monthly statement, and it would have to be paid in full by the due date of that month's payment, that is, within the 25-day grace period allowed for payment of monthly statements. Else, interest would start being charged on the unpaid part of the service charge at the usual humongous rate of H% per month. If I had not paid the previous month's balance in full, I would be charged interest at H% per month on the service charge starting from Day One; no free ride till the due date of the next month's statement. Of course, the balance carried over from last month would also be charged interest at H%. If I had paid last month's bill in full, but there were any other charges (purchases) during the current month, then  unless the entire amount due, this month's purchases plus service charge and that ""interest-free-for-twelve-months loan""  balance was paid off within the 25-day grace period, my purchases would be deemed unpaid and would start being charged interest. In short, the only way to avoid paying interest on the amount borrowed was to start with a card showing a $0 balance due on the previous month's statement, not make any charges on that card for a whole year, and pay off that 2% service charge within the grace period. It might also have required that one-twelfth of that interest-free loan be repaid each month, but  I had stopped reading the offer at this point and filed it in the round circular file. In short, while @JoeTaxpayer's tale of how ""As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage"" is undoubtedly how things worked once, it is not at all clear that they still work that way. At least, they don't work that way for me.  Heck, once upon a time, for a period of about 3 months, you could earn 1.5% interest per month from the credit card company by overpaying your credit card bill considerably. Their computers then just ""added on"" 1.5% interest by multiplying your credit balance -$X by 1.015 and so you got 1.5% per month interest from the credit card company. The credit card agreements (and the software!) got changed in a hurry, and nowdays all credit-card agreements state in the fine print that if you overpay your bill, you don't earn any interest on the overpayment." Rule of thumb, the earlier you pay down your balance, the less interest you will accrue and the faster you will pay off the debt as a whole. But lets play with some real numbers here.  You cited $5000 balance and a $750 payment, but with various bills and things adding onto the balance over the course of a month. Now if your purchases and payments add up to the same number, you are in a losing game, so for the sake of argument I am going to say you are putting $500 + interest on the card each month and making a $750 payment.  We also need an interest rate to work with, I am going to use 1%/month and 30 day months to keep the math a bit easier to follow.   You basically have two choices in this scenario, you can pay 750 a month on the card, then use it to make your $500 in purchases/other payments over time as you suggest in your question.  Or you can pay $250, and hold back $500 to make those other payments directly without running them through the card, as has been suggested in some other answers. So let us compare the two... If I start the cycle at $5000, make a $250 payment on the first day of the cycle, then have no other activity, I will have a balance of $4750 for the month and accrue $47.50 in interest at the close of the cycle.  Balance going into the next period is now $4797.50.  Carry this out for a year, and your balance at the close of the 12th cycle is $2431.79, and $431.79 of your payments went to interest. By contrast, if you pay $750 at the start of the month, then add $100 back every 6 days so that you spend $500 over the course of the cycle. You will have an average daily balance of $4466.67, which results in $44.67 in interest charges being accrued at the end of the month.  This gives you a balance of $4794.67 going into the next cycle, putting you about $3 ahead of the previous method.  Push this pattern out for a year and your ending balance is 2395.86, with 395.86 going to interest.  Resulting in a savings of ~$36 over making the smaller payment and paying cash for your other expenses.  If this happens to be a rewards card, you also have gained whatever rewards benefit it gives you. This demonstrates that by the strict numbers game, the scenario you propose should come out a small but measurable distance ahead of making a smaller payment in order to avoid putting things back on the card.  So why do so many people adamantly advise you to not do this?   Most of it has to do with psychology and risk.  The cash method does not leave any room for you to over spend.  You have shredded or locked up the credit card so it can’t be used casually, and when you run out of cash, you can’t spend any more.  Which forces you to pay much closer attention to where your money is going.   When you are running things through the credit card, you generally don’t have that hard stop unless you are up against your credit limit, and even then most issuers are quite happy to let you go over and charge you extra fees for doing so.  So if you have this plan where you are intending to put $500 on the card in a month, then lose track of something you did early in the month, and inadvertently spend $800, you are digging yourself deeper into the hole instead of climbing your way out. There is also a risk in terms of income loss.  In the cash method, you no longer have the money to spend, and you are forced to make the hard decisions about where to allocate what you do have, making you much more likely to cut back on luxury items to preserve the necessities.  In the card method, it is easy to say “eh, the card has room, I can catch up again later” and not realize the mess you are causing yourself until you are in way over your head.  I personally have run all my bills through a credit card in the past so that I could have one single payment to make.  Then I was unemployed for six months, and ended up moving before I found a new job.  Everything in between, including the move, went on the card.  Next thing I know I am carrying a balance of $15k where I used to always have it paid in full.  It took roughly 10 years, including several years of working strictly in cash, to get that back under control. I currently have a card that is carrying a balance, and I am running select expenses (such as fuel and food) through it while I whittle the balance back down.  Most of my main bills are still paid directly from cash, specifically so that I don’t fall back into the same trap I did before.  Even so, there were several months in the past year where the balance was creeping up instead of down, because we were not paying that close of attention to our spending.   Then my wife lost her job, and it forced us to closely evaluate where our money was going.  We still run certain things through said card, but we are much stricter about it being only those select things, and the balance is trending down again.  The main reason we are still channeling those expenses that way is because this is a cash back reward card, and we will be getting roughly $1000 back here in a couple more months. Yes. You can pay towards your credit card before the actual bill becomes due every month. However, your credit usage ratio does not get sent to credit reporting agencies exactly on the day of your bill; this data can be sent to the agencies any day of the month. So, keep your balance low at all times throughout the month, not just right before your statement closing date. Paying up in full before the statement is posted does not seem a good idea. I feel you should keep some small amount to be posted as a statement balance and pay that in full each month. If you keep your statements as always 0 will give creditors an impression that you have cards and you don't utilize them, so they cant really gauge how you preform being debt, whether you are able to manage your debt well etc. I always keep <100 dollar in every credit card I have to be posted a statement balance. I have >100k credit line over 3 cards. So if I take air ticket to SE Asia runs into 3000$ for my family, I pay 2900.00 a day before statement generates and keep 100 for statement to be posted. pay 100 the next day or as auto debit. This way you have some utilization + lower credit card outstanding at any point make your utilization right in single digits. "I am interested in seeing what happens to your report after you test this, but I don't think it's possible in practice, would not affect your credit score, and also wouldn't be worth it for you to carry a negative balance like that. Having a -1% credit utilization essentially means that you are lending the credit card company money, which isn't really something that the credit card companies ""do"". They would likely not accept an agreement where you are providing the credit to them. Having credit is a more formal agreement than just 'I paid you too much this month'. Even if your payment does post before the transaction and it says you have a negative balance and gets reported to the credit bureau like that, this would probably get flagged for human review, and a negative credit utilization doesn't really reflect what is happening. Credit utilization is 'how much do you owe / amount of credit available to you', and it's not really correct to say that you owe negative dollars. Carrying a negative balance like that is money that could be invested elsewhere. My guess is that the credit card company is not paying you the APR of your card on the amount they owe you (if they are please provide the name of your card!). They probably don't pay you anything for that negative balance and it's money that's better used elsewhere. Even if it does benefit your credit score you're losing out on any interest (each month!) you could have earned with that money to get maybe 1-2% better rate on your next home or car loan (when will that be?).  TLDR: I think credit utilization approaches a limit at 0% because it's based on the amount you owe and you don't really owe negative dollars. I am very interested in seeing the results of this experiment, please update us when you find out!" The biggest risk is Credit Utilization rate.  If you have a total of $10,000 in revolving credit (ie: credit card line) and you ever have more than 50% (or 33% to be conservative) on the card at any time then your credit score will be negatively impacted. This will be a negative impact even if you charge it on day one and pay it off in full on day 2.  Doesn't make much sense but credit companies are playing the averages:  on average they find that people who get close to maxing their credit limit are in some sort of financial trouble. You're better off to make small purchases each month, under $100, and pay them off right away.  That will build a better credit history - and score. I am going to break rank slightly with the consensus so far.  Here's the deal, it probably DOES help your credit slightly to pay it multiple times per month if it isn't a hassle, but the bump is likely to be minimal and very temporary.  Here's why: A key component of your score is your credit usage ratio. That is the ratio of how much of your credit limits you are using. You want to keep this number down as low as possible. Now here is where it gets tricky. Although you have a grace period to pay off your card with no interest, the credit card companies don't generally report the balance as of the due date. They either report the high balance or an average balance over the month. That is, it is based on how much you use, not how much balance you carry over each month. It isn't very intuitive, but that's just how it is. So technically, keeping that balance lower over the course of the month WILL probably help you, but the credit usage ratio is generally a rolling average over the last x months, so the effect will wear off quickly. So it is probably not worth doing unless you know you are going to apply for a loan in the next 6 months and need a temporary, small bump. Another consideration is that paying early provides no real financial benefit in terms of finance charges, but you are giving up liquidity which does have some value.    1) You probably could get at least a little interest for keeping the money in your account a few more weeks. 2) If you have a major financial emergency, e.g. broken down car, you might appreciate the fact that you kept your options open to carry that balance over a month. There are a few potential downsides but they are minor: If you forget to make the payment the interest hit the following month could be significant. With many cards the new charges will be charged interest from the start if the previous payment was late/missed. Just make sure you don't forget to pay the entire bill. If the $5K in monthly bills is a large portion of the credit limit for that credit card you could run into a problem with the grace period. During the three weeks between when the monthly bill closes and the payment is due, new charges will keep rolling in. Plan on needing a credit limit for the card of 2x the monthly bills. Of course you don't have to wait for the due date. Just go online and pay the bill early. If the monthly bills are a significant portion of the total credit limit for all credit cards, it can decrease your credit score because of the high utilization rate.  The good news is that over time the credit card company will increase your credit limit thus reducing the downsides of the last two items. Also keep in mind you generally can't pay a credit card bill or loan with a credit card, but many of the other bills each month can be handled this way. "You'd have to check the terms of your contract. On most installment loans, I think, they calculate interest monthly, not daily. That is, if you make 3 payments of $96 over the course of the month instead of one payment of $288 at the end of the month (but before the due date), it makes absolutely zero difference to their interest calculation. They just total up your payments for the month. That's how my mortgage works and how some past loans I've had worked. All you'd accomplish is to cost yourself some time, postage if you're mailing payments, and waste the bank's time processing multiple payments. If the loan allows you to make pre-payments -- which I think most loans today do -- then what DOES work is to make an extra payment or an overpayment. If you have a few hundred extra dollars, make an extra payment. This reduces your principle and reduces the amount of interest you pay every month for the remainder of the loan. And if you're paying $1 less in interest, then that extra dollar goes against principle, which further reduces the amount you pay in interest the next month. This snowballs and can save you a lot in the long run. Better still, instead of paying $288 each month, pay, say, $300. Then every month you're nibbling away at the principle faster and faster. For example, I calculate that if you're paying $288 per month, you'll pay the loan off in 72 months and pay a total of $6062 in interest. Pay $300 per month and you'll pay it off in 67 months with a total of $6031 interest. Okay, not a huge deal. Pay $350 per month and you pay it off in 55 months with $5449 interest. (I just did quick calculations with a spreadsheet, not accurate to the penny, but close enough for comparison.) PS This is different from ""revolving credit"", like credit cards, where interest is calculated on the ""average daily balance"". With a credit card, making multiple payments would indeed reduce your interest. But not by much. If you pay $100 every 10 days instead of $300 at the end, then you're saving the interest on 20 days x $100 + 10 days x $100, so 12.5% = 0.03% per day, so 0.03% x ($2000+$1000) = 90 cents. If you're mailing your payments, the postage is 49 cents x 2 extra payments = 98 cents. You're losing 8 cents per month by doing this." "The preferred accounts are designed to hope you do one of several things: Pay one day late.  Then charge you all the deferred interest. Many people think If they put $X a month aside, then pay just before the 6 months, 12 moths or no-payment before 2014 period ends then I will be able to afford the computer, carpet, or furniture. The interest rate they will charge you if you are late will be buried in the fine print. But expect it to be very high. Pay on time, but now that you have a card with their logo on it.  So now you feel that you should buy the accessories from them. They hope that you become a long time customer. They want to make money on your next computer also. Their ""Bill Me Later"" option on that site as essentially the same as the preferred account. In the end you will have another line of credit. They will do a credit check. The impact, both positive and negative, on your credit picture is discussed in other questions.  Because two of the three options you mentioned in your question (cash, debit card) imply that you have enough cash to buy the computer today, there is no reason to get another credit card to finance the purchase. The delayed payment with the preferred account, will save you about 10 dollars (2000 * 1% interest * 0.5 years).  The choice of store might save you more money, though with Apple there are fewer places to get legitimate discounts. Here are your options: How to get the limit increased: You can ask for a temporary increase in the credit limit, or you can ask for a permanent one. Some credit cards can do this online, others require you to talk to them. If they are going to agree to this, it can be done in a few minutes. Some individuals on this site have even been able to send the check to the credit card company before completing the purchase, thus ""increasing"" their credit limit. YMMV. I have no idea if it works.  A good reason to use the existing credit card, instead of the debit card is if the credit card is a rewards card. The extra money or points can be very nice. Just make sure you pay it back before the bill is due. In fact you can send the money to the credit card company the same day the computer arrives in the mail.  Having the transaction on the credit card can also get you purchase protection, and some cards automatically extend the warranty."