Credit Card Theory

First card in about 15 years. Got into trouble abusing one a while back, paid it off, and never wanted one again. 

Brother talks me into getting a Discover card. Different cash back incentives. I figure if I'm using money to buy gas and groceries, why not make them pay me?

I am paying off every bill. Even if its better to float a little debt every month to garner better credit ratings, (someone told me that. Don't know/care if its true) I'm paying the bill off every month.

The question is on payment. Is there any benefit to paying the total in increments? If the bill is $400, is there any benefit to paying $200, then a week later,  the remaining $200?

I want to squeeze this lemon for all its worth.

In reply to Appleseed :

Wait until you get your bill to make a payment for maximum help. 

If you were going for credit building you'd be better off getting a secured credit card from the local credit union. 

Splitting the payment is a mixed bag. Some people and places say good, some say bad. Won't have a negative effect, but may not have a positive one either. 

All of the credit cards I'm aware of calculate interest on a monthly basis so there's no benefit to carrying the debt for a shorter period.

Echoing what RevRico shared, I don't see any real upside to splitting a payment outside of making it easier on your own wallet as paychecks come in, but I can see downside as it might make the risk of missing a partial payment greater.  I don't reall know how a secured card from a credit union would really improve credit much more than any other credit card.  Best way to improve your score is to use it a little every month, staying under 10% of your CC limit at all times, and paying it off every month.  Like get one tank of gas with it a month and pay it off every month.  Just play the game, slowly, and you'll get a good score.

This bit of information may be completely irrelevant and useless but...  We have a couple cards that we just pay off in full every single month.  Single payment, made on the due date.  As a backup plan, we have the autopay set to make the minimum payment so that if we goof up and forget to change it to the full amount, we aren't late.   A couple months ago, we did make an oopsie and I guess didn't hit the confirm button enough times or whatever and only the minimum payment went through.  Following that, our credit-monitoring service showed a 20-some-odd point drop in the credit score because our available credit dropped.  The next month, once we had gone ahead and paid off the balance like usual, the score went back up that same number of points because we had more available credit.  Other than that occasion, we've never had any change in credit score that I can attribute to our credit card accounts other than just the fact that we have them, there are no balances, and the accounts have been open and active for a long time.  One of my cards is just something that I keep because we've had it forever and it's always good to have a backup but whether I use it or not doesn't seem to affect my score.  I've tried letting it sit dormant for a year, then used it pretty consistently for a couple months at a time, then let it go dormant again.  No change.

A couple years back, I heard about some sort of cottage industry where people with bad credit were getting people with good credit to issue them additional cards on their accounts.  The card would have the bad credit guy's name on it, but would remain in the possession of the actual account owner.  Somehow this was helping improve poor credit.  I have no idea if that ever actually worked.

pres589 (djronnebaum) said:

Echoing what RevRico shared, I don't see any real upside to splitting a payment outside of making it easier on your own wallet as paychecks come in, but I can see downside as it might make the risk of missing a partial payment greater.  I don't reall know how a secured card from a credit union would really improve credit much more than any other credit card.  Best way to improve your score is to use it a little every month, staying under 10% of your CC limit at all times, and paying it off every month.  Like get one tank of gas with it a month and pay it off every month.  Just play the game, slowly, and you'll get a good score.

Credit unions report secure credit cards every month to the credit beareaus. Major credit card companies report every quarter or 2 quarters. 

How this helps is multifaceted. More positive remarks showing up from on time payments, a more accurate revolving debt picture, being a secured card you control the credit limit so you can keep yourself out of trouble easier. 

One of the bigger things I picked up through credit counselling and having in depth discussions with people about how they managed to get their mortgages or rebuild after a bankruptcy or repossession.

Oh, I also found this:

https://www.experian.com/blogs/ask-experian/making-multiple-payments-each-month-can-help-credit-scores/

TL;DR: Experian says that it only helps in the sense that you're less likely to miss a payment and you're more likely to pay more than the minimum.

But if you're only making the minimum payment on your credit card account every month, your credit score is really the least of your problems.....

Appleseed said:

I am paying off every bill. Even if its better to float a little debt every month to garner better credit ratings, (someone told me that. Don't know/care if its true) I'm paying the bill off every month.

Good! I don't know who speads these rumors, but there is no logical sense that paying intereston a balance is worth it to allegedly build your credit score. I have been diligent in always paying mine off every month and my credit score still got pretty good, pretty quick. Keep it up and don't listen to that bad advice!

As a whole I'm with you on this Credit Card Theory. I know certain financial professionals argue that you should never get one, but I think that's extreme. As long as you are diligent in paying them off every month, the benefits are great. Cashback, convenience, credit rating, purchase protection, and even spending tracking.

Discover is my main card too and I have always been happy with them. Had a fraudulent charge once, they notified me, I confirmed it was fraudulent, they froze the card, cancelled the transation, and I had a new card in maybe 2 days. 

A couple years back, I heard about some sort of cottage industry where people with bad credit were getting people with good credit to issue them additional cards on their accounts.  The card would have the bad credit guy's name on it, but would remain in the possession of the actual account owner.  Somehow this was helping improve poor credit.  I have no idea if that ever actually worked.

This is kinda how I fixed my score, almost 200 points in a month.

The gist of it is that the person with good credit has a long credit history and a decent debt limit. By adding the bad credit person as a user, the bad credit person is able to share some the age of the account and the credit limits. 

My mom had been a discover card holder since 96. In 2016, she added me as a user, and I magically had a 10 year history with Discover and a substantial credit limit. 

You can see the massive jump in my credit score when I became a user. 

The hard part is having the trust in someone to do that for you. If the good credit person is keeping the card it may be safe for them, but if the bad credit person does bad credit things it can hurt both parties. 

The only reason to make multiple payments in a single billing period that could actually help your score (that I can think of) is to reduce your credit utilization.  Part of your credit score is determined by how much of your revolving credit you have in use.  I think anything more than 30% or so can look bad.  So, say you have a card with a $1000 limit, and you charge $600 a month to it.  Your credit utilization for that month would be 60%, which is definitely in the "bad" category, so paying more than a month might help.  
 

That said, I think on time payment is a much bigger chunk of your credit score.

Considering you've had some trouble in the past, don't over complicate it. Pay once a month, on time, every single time. 
 

Automate it if you can. 
 

The negative impact of 1 mistake is too big to worry about squeezing lemons. 

I don't play any sort of game, but I have both of the credit cards we use automatically pay off the complete balance each month because I also had some problems in my past.   My understanding is that your credit score is more based on your payment history and credit utilization than any sort of partial payment mumbo jumbo, but the problem is that there's no one who publishes the rules of the game, so there's not too much you as a consumer can do.  Unless you have an immediate need (like, in the next 3-4 months kinda thing) to improve your credit, I'd recommend just automatically paying the full amount so you don't accidentally ever pay interest.

For the record, the two cards that I use are the American Express Blue Cash Preferred which does have a yearly fee of $79 dollars.  It gives me 6% cash back on groceries, 3% on gas, etc.

For anything that isn't groceries or gas, we use a Citi Double Cash card, no annual fee and it gives you 2% back on everything.

Everything that can goes on the cards.  We're fairly disciplined, and have a pretty stable monthly expendure & fairly good budget, so this has worked well for us.  The Amex card nets us ~$650/year in cash back ($570 after the yearly fee), and the citi gives us ~$1060.     By my estimate, paying the Amex fee of $80 nets us approximately $450/year over just using the citi.   By only using it for groceries and gas, it makes it easy to remember which card to use where.  It's nice to get $1600/yr on stuff we're buying anyway.

We've never paid a cent of interest on either of these cards.

We're only interested in cards that give us cash back (in tthe form statement credit), so there's no "oh, I didn't go on a trip this year so my plane tickets didn't get me any benefit" kinda shenanigans.   It's just straight cash back.

I've been a highly satisfied Discover cardholder since shortly after their introduction.  I was a young professional fresh out of college and had no credit history.  J C Penney rejected my credit application.  Discover came through with a card and it's been my primary CC ever since.  Suck it, Penneys!  I hope you go bankrupt. 

SV reX said:

Considering you've had some trouble in the past, don't over complicate it. Pay once a month, on time, every single time. 
 

Automate it if you can. 
 

The negative impact of 1 mistake is too big to worry about squeezing lemons. 

This. We use our sam's mc for EVERYTHING. Any bills we can, all purchases etc. We usually get a nice $700-900 check in March from them. Both our credit scores are in the low 800's and we've not seen any issues with paying off every month. 

Don't use it to purchase more than you would normally. Pay it off in full every month. Reap the rewards program and not pay interest. IT's really simple if you do that. 

In reply to 1988RedT2 :

I'm not an expert but while carrying a small balance isn't bad, I'm still pretty sure it's better to pay in full every month. And as others said, keep the balance low relative to the limit and somewhat consistent. I think I have like $25k of total credit limit, my monthly total balance is usually $2k or less. You can game that because more accounts is usually good, so opening a new card to get extra credit limit and then barely using it has no downside other than an extra payment to track. I'm pretty sure my score ticked up at least a few points with the addition of the latest card, before that I was getting close to that 30% or whatever it is utilization threshold.

Considering that any card worth having these days has some kind of cashback system, there's no reason to be buying anything with cash unless you have to.

I cannot comment directly on multiple payments vs single payments, but I have always used single payments. I have always paid off the full balance in full every month other than when I got a 0% card for a big home improvement project, which I used as a one year 0% loan, paying off the minimum each month until month 12 when I paid it off in full. I have Discover for my main card, and Chase for a backup (some places don't take Discover but do take Visa), both have good points setups, both on autopay. Our credit scores are something like 825, so it's working. I have absolutely no trouble getting another 0% card for an emergency situation exceeding my savings, or even if it's just more convenient than savings. It's a tool. Use it wisely, and use it simply.

Single payments here.  I set all my credit cards to come due on the 25th of every month, same as insurance, and just try to pay everything off by the 20th to 21st.  Thats worked for me and my 822 credit score, so I cant say that doing multiple small payments would make any difference.  

I also don't use autopay for anything, I like to review the charges.  Only autopay is the mortgage since that is through a different account.  

I like Discover Card although I don't have one.   My grandfather and Dad were big Sears guys and I inherited some Discover stock from my Dad.   
 

Keep using those Discover cards.  Allstate insurance too.  

As long as it's paid on or before the due date, no advantage to breaking it up. I'm an Amex fan, run everything on it but it's paid off every month. We use the points for travel, free trips are fun (and I know it's not really free). 

I pay my card off every Friday for many reasons. It is the only card I use and the utilization rate on a few hundred dollars versus a few thousand can swing my credit score from 805 to 850. Also, I use the opportunity to check all the transactions for fraud and ensure my budget is up to date every weekend. Finally, if I pay the card off every week, I will easily have made the minimum payment every month, so I've never missed a payment.

In reply to Johnboyjjb :

I don't get the caring of your credit score is 805 vs 850 thing. That score only matters if you're looking for a loan, and at that point you've got a good enough score to get the best rate, or you don't, 805 will get you the same rate as 850. 
 

I'm amazed by the number of people that track that number like it means something. 

In reply to Steve_Jones :

I pay attention at car insurance renewal time. One time it dipped to 795 and it made a difference.

I think it's been explained but to be clear, most rewards as well as balance reporting to the credit agencies, happen based on the dollar amount of the statement at the end of the month.  So to take advantage of the card, what you want to do is wait til you get a bill, and then pay that bill off completely.  If you charge $100, pay off $100, charge $50, pay $50, etc, you'll have a $0 bill, but also no rewards and a $0 credit usage reported, which doesn't help anything.

What you want to do is leave the $150 on there til the statement period ends, receive a bill, and then pay the bill.  There is a grace period of typically a month, so doing this will not result in any interest/fees.  This way you will get your 2% cash back (or whatever rewards program you have) on the amount of the statement and your credit report will show you carrying a balance, even though you never pay any interest on that balance.

This does mean if you normally charge/pay $500 a month and then put $5,000 on the card one month, your available credit change may cause a couple of point drop in your score until the next month's bill gets reported with a lower amount again.

I suspect the "partial payment" concept comes from looking at the effect you can have on long-term debt (ie, house payments) by paying half as much twice as often. But since credit card interest charges don't kick in until you start rolling over a balance, it's irrelevant. I can see it making it easier to manage cash flow if you don't have a single big payment at the end of the month - we actually do this at Flyin' Miata. We run as much as possible through credit cards because we get paybacks, and we pay every week IIRC because it just smooths things out.

I've never worked to build credit, I just pay stuff on time and I rarely check my score because it's high enough not to matter. I did notice that when I paid off my house a few years back my credit score dropped because I was obviously a bigger risk now that I didn't have my biggest asset partially owned by someone else. Sheesh. What a game.