ALWAYS Pay Your Credit Card On This Date! | INCREASE CREDIT SCORE FAST

Knowing when to pay your credit card bill and how to pay your credit card bill can seem a little bit like a game of chess (chess B Roll). If you make the wrong move, you can find yourself “losing” at the credit score game. If you make the mistake I’ve made, just a few times, you can even potentially see your credit score drop several points. My score in particular dropped over 20 points temporarily after making this mistake, and that is nearly the same impact as opening a new credit card account. So understanding your credit card statement is very important. As we watch this video, I want you guys to understand 3 things. Statement Closing Date, Payment Due Date, and Grace Period. Let’s get a quick definition of all 3 of those terms, but before we get into that, as you watch this video and if you find the information helpful, consider hitting that like button for the youtube algorithm, subscribing for more videos like this from myself, and hitting that notification bell so you don’t miss any future videos. Now on to the definitions

Statement Closing Date: Statement Closing Date is the Last day of your monthly billing cycle. This cycle ranges between 28 days and 31 days depending on the number of days in the month. This is also when interest charges are calculated. Your statement closing date will always be the same calendar date.

Payment Due Date: Think of this as your absolute last day to make an on-time payment. If you miss this date, you can incur penalties such as late fees, so pay very close attention to your due date. Here’s a tip, your payment due date is going to fall on the same calendar date every month, unless you request for your credit card issuer to change it for you.

Grace Period: This is the period in between your statement closing date and payment due date where you’ll be charged no interest for those transactions made during the recently completed statement cycle where payment is actually due. Take a look at this timeline graphic that really helps to explain this. This grace period can be anywhere between 21 days – 28 days. This fluctuates during the year, so be sure to pay particular attention to it. NOT EVERY CREDIT CARD’S GRACE PERIOD HAS THE SAME TERMS AND CONDITIONS.

Now, that you understand those key terms, especially statement closing date vs payment due date, let’s take a look at my credit card statement, and for this video, I’ll be using my Chase Freedom Unlimited (first ad). The first thing I notice on my statement is “New Balance” of $320.92 and “minimum payment due” at $40, as well as the “payment due date”. This structure is intended to “trip up” unsuspecting credit card users and the reason why I say this is because the call to action is focused upon the “minimum payment due”; however, the “new balance” is actually “due” as well, but notice that this statement doesn’t state “new balance due”.

Now if you’re wondering how much of a problem this created, wander no further than the CARD Act of 2009 (credit card accountability responsibility and disclosure act). When the government has to step in to force you to be accountable, responsible, and transparent, you know that this is a HUGE issue. One of the key things this act required is for credit issuers to disclose the total cost of making only-minimum payments. This statement is in compliance because they are required to show you:
– the number of months it’ll take you to pay the balance in full if only the minimum paid is made,
– the total cost of making minimum-only payments with the current interest rate factored in,
– the monthly payment required in order to pay the total balance within 36 months.

Every month, your goal should be to make sure that your “new balance” aka your “statement balance” is the actual payment amount that you’re paying by the payment due date to avoid any interest charges (CHECK YOUR CREDIT CARD TERMS AND CONDITIONS, NOT ALL ARE THE SAME).

Why is this important?
Credit utilization! Credit utilization is the percentage of your available credit line that you’ve used. I like to aim to keep my utilization between 1% – 3%. On this statement, you can see that my reported statement balance is 390.92, instead of 506.76. We do a little quick math (rounding up) my utilization would have been at 5% rather than at 3%. In my experience, my credit score is a little higher when my statement balance is between 1-3% credit utilization. One thing that I avoid, and this is due to experience, is reporting 0% utilization. I’ve allowed this to happen to me twice, and on both occasions my credit score dropped a bit over 20 points until utilization was reported on the credit cards. If you aren’t aware, credit utilization accounts for 30% of your credit score, which means that on a scale of 850 points, it can account for up to 255 points, which is a significant chunk of your credit score. Keep your utilization as low as you can, but not at zero.

The post ALWAYS Pay Your Credit Card On This Date! | INCREASE CREDIT SCORE FAST appeared first on Correct Success.