I missed a due date once without my knowledge. Since I had no idea I no longer had grace period I accrued interest on large purchase I made at the time and paid a total of $150.01 in interest over the course of 5 months. That's the reason why I started learning more about personal finances and taking advantage of them instead of them taking advantage of me. I'm still up $500+ after years of 1% cash back on that old credit card, but boy did that $150.01 felt like a slap in my face
Ouch. If only they will turn the statement red when you no longer have a grace period. Lol. There's the would have could have thing... but... I have gotten finance charges before for missing the due date accidentally. This is before they have autopay everywhere. And when I did miss a payment the first time, they often times will waive the fee AND the interest charges sometimes out of courtesy. Just saying.
Thank you for explaining this so clearly. Other videos don't explain it so well. This was clear and concise. I've copied the graphic and it's on the fridge for my wife and me. Appreciate it.
I keep telling people to pay their cards off every month, & they always say to carry a balance so my score goes up. I'm at 780 so far, I think I'm doing it right. Just always pay off what you spend every month asap b4 the due date. No interest & Grace period for life!! 🤙🏻This channel is awesome !Subscribed! I say let the banks work for us & not the other way around.
Yep, carrying a balance just makes you pay interest. I've heard that more than once in the comments of my vids. Yep, paying in full before the due date is the way to go and my preferred way to use cards. Thanks! If you want the banks to work for you check out my 'Balance Cancellation' vid. =D You make them pay you in that case. =D
BeatTheBush So I walked into my bank and told them I wanted to build credit (I’m 18)... They got me an unsecured credit card (B.O.A Cash rewards). During our session she mentioned I should carry money, pay 80% of what I owe. But you’re saying I shouldn’t do that. Pay the Full amount back. One thing she did say was that I should only pay 80% back while I have my 12 month no interest promotion... Once it ends go ahead and pay full amount. What are your thoughts on that? My other question is I’ve heard of the 30% rule, meaning I should only use 30% of the limit they gave me... For me the limit is $800 but I will only use like $200 a month right? What is your recommended % to use of the limit? I want to build my credit to be good...
@@Carlos-tx9vt I did the same thing recently except my B.O.A. representative told me to just pay off in full each month. Also the 30% rule is referred to as some specific area of a credit score where lenders look at how much you borrow. Typically, I think, the more lenders see you borrow the more of a high risk you are shown statistically.
Syr Baman I see. I have learned a lot since this comment I posted. So what I’m doing now is I’m using 30% of the card, then getting it down to a 5% utilization rate, before the closing date. Later paying the 5% a week before the due date to minimize late payment. I would of course not spend any money from when I pay early to the actual due date. Any things you fee I should add to this method that could increase my credit even more? Thanks for the reply, great channel. You got a sub.
I remember back in 2008 before I was a "winner" in the credit card game. Had no idea about signup bonuses (and probably missed them), didn't understand rewards, and always carried a balance. I was young and dumb! Now I know what I'm doing and I still enjoy watching videos like this. Would've been great if these were around when I got started!
This makes so much since. So far we have payed down on our capital one credit card and It went up about 100 points by paying before the statement date and leaving an 0% utilization on it. We are going to continue doing that and hopefully it goes up even more.
Wow, that's some crazy points gain! However, you will not get any more gain by repeatedly doing the boost trick. The boost trick is a temporary boost and as soon as you stop doing it, you will loose the points you gain. Repeatedly doing it will not get you more points.
I think the idea is keeping a balance after the statement date but then paying it completely off before the due date so the balance is reported on your credit report as a 1-7% utilization vs a 0% utilization. Your example shown in this video is keeping a balance after the due date which causes you to pay interest and lose your grace period. That's not the correct strategy.
You’re right G. It’s videos like these that get me stressed about how it actually works. But yea that’s what I know from watching countless hours of TH-cam videos on credit🤝
thanks for explaining it very well. I swear I'm not a slow learner but I just never had a c.c. and I kept getting confused about how to do this or that
I am currently with TD bank with maximum of i believe 14 transactions per month. so what I do is paying at least 100 dollars on top of my credit card balance anticipating my future spending on the next billing cycle. I never knew about grace period on credit card, but now, I can further tune up my paying cycles. thanks.
BeatTheBush, To be honest, this is going to save me I've had my credit card for a year and a half. I thought to carry a balance was a good thing but now I know it's not, Thanks man my credit score is currently 740 while carrying a balance but now I can get it higher
Let's say that my statement balance is $200 (closed on Jan 20), but make an additional purchase of $50 (on Jan 21). As long as I keep paying my statement balance in full ($200), I won't lose my grace period and be interest free?
The key TRICK IS TO PAY WHAT YOU OWE BEFORE THE CLOSING STATEMENT date, DONT PAY ON THE DUE DATE... ALSO KEEP YOUR UTILIZATION BELOW 30% PERCENT. ALWAYS.
Question. I have a 300 credits card limit. I spent 300 and before the statement I pay 250 back and 10 day later before it due I pay the 50 dollar. Is that ok?
So, if I don't want to pay any interest, I want to make sure my utilization rate is 0% before the due date, and I want my credit card company to give me a bigger credit limit, I should spend as much as possible (from regular spending) of my limit, pay it all off about 3-5 days before the due date, and then don't use my credit card (using my debit card for food, etc) until the day after the due date?
Thank you so much for making this video. I've been looking for a clear explanation of how grace periods work. I do have one thing to point out though. In your example, after choosing to only pay $999 by the due date, isn't it a little misleading to say that the CC company retroactively starts charging interest for all PURCHASES in month 2? As I learned in your "How Credit Cards Calculate Interest" video, interest is calculated by using the average daily balance. So, wouldn't the daily balance in month 2, up until when the $999 was paid, be $2000? So, just throwing out a rough number, wouldn't the interest be more like $17.50 assuming the $999 was paid about three weeks into month 2? I'm asking because I'm trying to get a better grasp on what happens when you lose your grace period. I realize that your purchases start accruing interest, but I want to better understand how that works more specifically.
You didn't mention that you have to read the fine print - some cards use the “two-cycle daily balance” method (Discover did at one point, don't know if they still do). What this means, if you don't pay off your balance from month 1 in full by its due date, 25 days (say) into month 2, not only are you charged interest on everything in month 2 (carried over balance plus new purchases), but they go back and compute interest on purchases during month 1 (and perhaps even the balance from month 0 that you paid in full during month 1).
Yes, simple rule to live by and easier said than done for people living pay check to pay check but don't fall into the trap of buying what you can't afford and becoming a slave to credit card companies and pay the full balance EVERY month. Great video!
It does seems the living pay check to pay check situation is very hard to break out of and I completely skipped over this. Getting the grace period back might be the least of one's worries when trying to pay the bills that was due last month.
What you fail to mention is that if you do not pay off every cent of your statement balance by the due date, then you will pay interest on the unpaid statement balance amount going back to the issuance date of said statement balance plus interest on any new purchases since that statement date. Therefor, if you anticipate not being able to pay the statement balance amount in FULL (to the last penny) by the statement’s due date, then you should at least try to pay off as much of that statement balance as early as possible (during what would otherwise be your interest-free grace period) before the due date in order to lower the average daily balance that you will end up paying interest on going all the way back to the statement balance issuance date.
Yeah residual interest is a bitch. I paid my credit card balance in full of 8.3k and on the next statement thinking I was in the clear I got a balance of $66 bucks. I was like wtf. So I paid that off on the very same day I got my statement that way they don’t charge interest on the 66. Shits crazy bro
ZMagickz theres a few if you have a credit card with an introductory rate of 0 % for 15 months and you just opened up the card or middle of the year. another reason is if somebody gives you a special introductory rate of 4% another reason let's say you have 5 credit cards and you don't want to keep making a small purchase on your less used card so if it's a card that you only will use 1 time every 4 months that would be a reason. other than these I would pay the bill in full and on time.
Ok i understand now everything, now wat's "too early" to pay your due date then paying it "early"? is 2 weeks before the due date "early" or "too early"?
You also could get cash back if you use cash back credit cards. You also get purchase protection when using cards. You also do not have to carry cash around or as much which is better for theft reasons.
The "weird reason at 2:11 is to show a payment "on time" track record on the payment history matrix of each account on cresit reports which is 30% of credit scores. Correct? (Eventhough the grace period hack you describe is lost, in carrying the hypothetical 1 dollar at due date) payment history is more valuablewou ok dnt you agree? Just use a different card so you dont get retractively charged interest on the purchases before the due date.
I only have a 781 score. My goal is to get above 800. I have 5 figure credit line with almost no utilization and pay off my one credit card each month. Why am I not above 800?
The problem with that is opening new accounts to increase available credit creates hard inquiries and shortens average account life. I guess I just have to be patient and maintain my current cards.
Hi BeatThe Bush ...Please explain here. My cycle dates are as follows. opening Date 7, closing 6 and Payment Due date 31st or the last day of the month I always make sure that on the 31st, my credit card is paid up. for example. My facility is $5000. I make sure there is no outstanding balance by this date. My Question, if I pay the outstanding balance reflecting on the statement by the 7th i.e., much earlier than the due date, does it count. How does it affect my transactions I make after the 7th but before the 31st. as well how does it affect the transaction, I make between the due date the 31St and 6 the closing date. should i make sure that from the due date until the statement close the outstanding balance is zero and start utilizing the card after the 7th when a new cycle begins I want to avoid paying interest
Hi, is it okay to have below 9% utilization before the statement date but always pay off everything before the due date? (I feel like people are confusing the statement date with due date)
Yes that's OK.. Lot of persons do get the statement date vs confused. Also for your utilization it can even go to 100% as long u get it to below 30%(ideally below 10%) before your statement date, because only what it left on by your statement date is reported.
Yes this is ideal! Showing a 1% utilization by paying AFTER the statement and BEFORE the due date improves your score. Because credit card companies report right after the statement ends.
i still don't understand.. I don't know bout the statement date vs due date maybe am just dumb hahah however I still make my daily payment..voiding interest.
The interest is charged based on your average daily balance for that billing cycle. So making payments earlier means your average daily balance is lower. This translates into a lower interest. So pay as much as you can, as soon as you can to lower interest charged.
Depends on the strength of your current score. Mine went down from 840 to 825 points after about 2 hard inquiries. It'll be more if you're around the 700 range.
I have a question. I don't think it was answered in your video or if it is I didn't get that. my due date is in March 15 2021. but I already paid that in Feb 28(Pay Day) so is it done? Can I use my credit card again to purchase stuff? well actually I've been using my credit card again even before the due date, specifically March 7 2021 - groceries. my question is. does my payment in Feb 28 don't matter anymore cause I purchase stuff before the due date? Do I need to pay those back before the due date? Does paying credit card debt before due date, and then spending cash make my payment irrelevant?
I have recently discovered your youtube channel and I have started paying off my full balances before the closing dates, my question is will any of my credit card rewards be affected since most of my rewards are set up as statement credits?
You still get your rewards because the purchases are real purchases that were not returned. So yes, you will get your rewards still. Also, try to pay all but $2 of the balance to make sure you still get a bill. Setup auto payment to pay that remainder $2 off. This is for comparability reasons for all credit bureaus.
Question. I have a credit card. Billing cycle April 18 - May 19th, with a due date of June 16th. Credit Karma says this card last reported on the 30th. First question is does that sound accurate for the card to be reported to the bureaus two weeks after the due date? Also, I have the card set up to auto draft the full amount due on the exactl due date. Is that okay?
Maybe I'm on the wrong video, but so I should keep a small balance before the credit report due date then pay it all off next day before the actual due date for the card?
That's only if you are paranoid that they would look at your card as inactive if you pay off your balance before the statement date. Its still reported as active even if you do so. Hence you can pay it all off. I know this makes a lot of people nervous but you can leave $1 on there if that makes you feel better.
Hello! Please help. Do I understand it correctly? I got a $500 credit card. I made a purchase using credit on May 10 on $100, so the credit available is showing as $400. Which one of the two is correct? 1) I have 21 days starting May 10 to pay off $100, so that my credit balance goes up to $500. So the amount is due on May 31 to avoid any interest payments. 2) I will receive a statement on, let's say on June 10 and I will have 21 days starting on June 10 to make the payment to avoid any interests. So basically, I have 51 days from May 10 to make the payment and I will not be paying any interest as long as the payment is made prior to or on June 31. Sorry, there are many dates but I would greatly appreciate your help! Thank you!
It's generally #2. When you make a purchase at the beginning of the statement cycle, you will not be charged interest if you pay it off before the due date of that statement cycle. The due date of a statement cycles is generally about 21 days after the statement cycle ends. So the BEST case is if you bought the item at the beginning of the cycle and then pay it right on the due date. Of course, you will only have the grace period if you kept it from the previous period and was not carrying a balance the month or two before doing this.
so confused.. thought you not supposed to pay the total bal on your card because companies will think that you never used that card and it will eventually go dormant. ok.. i see i have lots to learn about how credit card works.
That is correct IF you do this before the statement date. If you do this right before the due date, it will not appear dormant. They check state of the card on the statement date.
It depends. Most times not. You may have interest to pay that is not shown on the bill. A small amount less than a dollar means you carried a balance. This means you do not have your grace period back.
Anytime between the statement end date and due date is the same to the credit bureaus. You have to account for how long it takes to actually get credited to make sure it arrives before the due date. Since this is about grace periods, like I said, it's tricky. You have to be on top of your card for 2 months or so to pay off interest amounts that does not appear on your statement.
Sometimes it takes one or two periods to get back your grace period. The interest accrued does not appear until you get your statement. And this varies from card to card.
Paying in full avoids the confusing all together. If you get stuck one cycle by trying to take advantage of a 0% APR, you might find yourself trying to get back into the grace period.
Question i have an account with synchrony sport - i had an promotion period with the company on their card. I have e-statements and do everything usually through the automation of the app. Unfortunately i got hit with the interest rate. 2 weeks after the 30 day grace period ended when i checked. There is nothing on their app or website to tell me when my start date is to clarify even checking statements and clicking everywhere. I can fully pay off the balance and willing. Is there a way to remove the interest rate due to poor communication method to consumer ? When i called in and asked about it their answer from an account manager is telling me statements are deleted after 11 months, so i can only view the previous 11 months. What can be done ? Or is there any underlying cause like covid or hospital etc to let them re-consider ? I do know there is way from one of them telling me if they input my concern it would not go through and if they did anything that person would lose his job etc so there is a way im just not fully aware.
so im thinking of getting a laptop soon. it costs about $1k. im 20 years old and just got 2 different credit cards. 1 b of a rewards (600 line) and 1 discover it card (750 line). i will be using the bofa however because it gives me 1% cb on all purchases. i have the $1k saved up already but do u recommend to put like 200 of it on my bofa and rest in cash in order to build credit? or like 500 on bofa
I recommend to put 500 on the BofA and 500 on the Discover. Discover also gives 1% cash back. Doing this is in line with building credit on a low limit (more info here: th-cam.com/video/attQKzngqoE/w-d-xo.html) where it will help you in getting a higher credit limit more quickly. Also, consider going through the Discover shopping portal and finding the website you are going to get your laptop because they may have a high % cash back through that portal. Lastly, consider getting this one: amzn.to/2keOwrr If it ends up being cheapest on Amazon, getting it through my link will be your cheapest option AND you will help support this channel.
BeatTheBush Thanks so much I will definitely do that. And I've been looking at the refurbished macbooks more but heard good things about the xps, I'll llook into it more.
I thought you said to leave a 1.99 or 2 dollars balance on your statement to increase ur credit score and reduce utilization vs paying the whole balance in your other video??
Yes, that helps keep your cards active. So the trick of paying your card twice in a month, once before the statement date and again right before the due date still applies.
BeatTheBush in other words I should pay the balance minus $2.10 before the due date and carrie that balance right past through the statement closing date and after the closing date use the credit again and Repeat the cycle again correct? Thank you
You can but it would not help improve your score. You want to pay it before the statement date if you want to temporarily zero out your utilization ratio. More info here: th-cam.com/video/Gemenh0Gzzg/w-d-xo.html
BeatTheBush So when my first statement arrives they will give me the statement date? This is the second day with my first credit card so i still dont have a statement date.
@@BeatTheBush I haven't had to pay interest in months now, but I've been paying my card off before the closing date. I'm looking to maximize how long my cash stays in my bank account for maximum interest without having to pay interest, but I'm afraid to test this grace period idea at risk of having to pay an interest charge.
Fantastic video. Can you actually make a detailed example in Excel to show this with real numbers? Also, is the "statement due date" = end date of billing cycle + grace period?
Correct real transactions. Something like this.th-cam.com/video/Z23OtNemUgQ/w-d-xo.html Your explanation is awesome. If you have an example with a few scenarios where full balance is paid before due date, partial payment before due date or no payment with 2-3 billing cycle statements, it will be crystal clear.
Thank you! As mentioned before, the video is great and so is your explanation. I just think providing real transactions and covering all scenarios will cement things permanently.
So I have a $ 2000 available credit. Let's say I pay off my credit card IN FULL before the closing date (11/01/17 "For example") and my due date is (12/16/17 "Again for example"). Can I use my credit card again if my available credit goes back up to my original $2000 available credit after paying it off before the closing date? Or should I wait until AFTER the due date to use my credit card again and everything is safe and sound? Thanks! :)
Yes, you can use it after it closes and that amount will not be reported until the next closing date. You can also use the credit limit more than $2000 if you pay it off and use it again in one cycle. Some cards limit this to about 2.5x the total limit. But if you do this, they will likely increase your limit pretty fast.
BeatTheBush ahhh thank you so much! Took so much weight off of my shoulders. You’ve honestly been such a great help in the TH-cam community! Keep making great content friend! :)
Funny thing is, you do benefit credit score wise by holding a sub 7% balance on ONE card with the remaining cards having a $0 balance... It's not a "pay the bank" scheme smh. It's literally how the FICO algorithm for each Scorecard is made. Go research the MyFICO forums if you don't believe me. It's common knowledge. In short, do your own research and don't believe every random TH-camr 👍
Thank you for this video. I had no idea that it worked like this, and was surprised by it. (I always pay on time so it would hopefully never effect me)
Hi I have my new Citi Double Cash card - thanks to you because I used cash for everything unaware of all those free money lying around, duh... thanks for opening my eyes :) OK so question is this: There are two modes of autopayment minimum-payment & last-statement (no option full-current-balance) - is the last-statement mode good enough to keep the grace period?
HA! I'm glad! Now you get 2% on everything yay! Just be careful with a credit card since its easy to spend more than what you normally would. Of course do not do minimum payment. You want to pay the full amount of the last statement NOT the full amount of the current balance (this one includes the amount of last statement plus everything up to now). So full amount of the last statement is good enough to keep the grace period.
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I missed a due date once without my knowledge. Since I had no idea I no longer had grace period I accrued interest on large purchase I made at the time and paid a total of $150.01 in interest over the course of 5 months.
That's the reason why I started learning more about personal finances and taking advantage of them instead of them taking advantage of me. I'm still up $500+ after years of 1% cash back on that old credit card, but boy did that $150.01 felt like a slap in my face
Ouch. If only they will turn the statement red when you no longer have a grace period. Lol.
There's the would have could have thing... but... I have gotten finance charges before for missing the due date accidentally. This is before they have autopay everywhere. And when I did miss a payment the first time, they often times will waive the fee AND the interest charges sometimes out of courtesy. Just saying.
@@BeatTheBush hey do u have an email ?I have a couple questions..please!
Thank you for explaining this so clearly. Other videos don't explain it so well. This was clear and concise. I've copied the graphic and it's on the fridge for my wife and me. Appreciate it.
I keep telling people to pay their cards off every month, & they always say to carry a balance so my score goes up. I'm at 780 so far, I think I'm doing it right. Just always pay off what you spend every month asap b4 the due date. No interest & Grace period for life!! 🤙🏻This channel is awesome !Subscribed! I say let the banks work for us & not the other way around.
Yep, carrying a balance just makes you pay interest. I've heard that more than once in the comments of my vids. Yep, paying in full before the due date is the way to go and my preferred way to use cards. Thanks! If you want the banks to work for you check out my 'Balance Cancellation' vid. =D You make them pay you in that case. =D
BeatTheBush So I walked into my bank and told them I wanted to build credit (I’m 18)... They got me an unsecured credit card (B.O.A Cash rewards). During our session she mentioned I should carry money, pay 80% of what I owe. But you’re saying I shouldn’t do that. Pay the Full amount back. One thing she did say was that I should only pay 80% back while I have my 12 month no interest promotion... Once it ends go ahead and pay full amount. What are your thoughts on that?
My other question is I’ve heard of the 30% rule, meaning I should only use 30% of the limit they gave me... For me the limit is $800 but I will only use like $200 a month right? What is your recommended % to use of the limit? I want to build my credit to be good...
@@Carlos-tx9vt I did the same thing recently except my B.O.A. representative told me to just pay off in full each month. Also the 30% rule is referred to as some specific area of a credit score where lenders look at how much you borrow. Typically, I think, the more lenders see you borrow the more of a high risk you are shown statistically.
Syr Baman I see. I have learned a lot since this comment I posted. So what I’m doing now is I’m using 30% of the card, then getting it down to a 5% utilization rate, before the closing date. Later paying the 5% a week before the due date to minimize late payment. I would of course not spend any money from when I pay early to the actual due date.
Any things you fee I should add to this method that could increase my credit even more? Thanks for the reply, great channel. You got a sub.
I remember back in 2008 before I was a "winner" in the credit card game. Had no idea about signup bonuses (and probably missed them), didn't understand rewards, and always carried a balance. I was young and dumb! Now I know what I'm doing and I still enjoy watching videos like this. Would've been great if these were around when I got started!
Back then TH-cam was not as popular right? You might have gotten good info from researching websites but certainly not in easy to digest video form.
I built someone's insurance once .............. and now he's insured......... crazy enough they took my advice
This makes so much since. So far we have payed down on our capital one credit card and It went up about 100 points by paying before the statement date and leaving an 0% utilization on it. We are going to continue doing that and hopefully it goes up even more.
Wow, that's some crazy points gain! However, you will not get any more gain by repeatedly doing the boost trick. The boost trick is a temporary boost and as soon as you stop doing it, you will loose the points you gain. Repeatedly doing it will not get you more points.
Beat the Bank! Your information is always💰very easy to understand🌻and right to the point❤️ Thanks for all the love✌🏾
Thank you!
the example of how leaving $1 in the balance affects the interest and grace period and all that really explained a lot of things
I think the idea is keeping a balance after the statement date but then paying it completely off before the due date so the balance is reported on your credit report as a 1-7% utilization vs a 0% utilization. Your example shown in this video is keeping a balance after the due date which causes you to pay interest and lose your grace period. That's not the correct strategy.
You’re right G. It’s videos like these that get me stressed about how it actually works. But yea that’s what I know from watching countless hours of TH-cam videos on credit🤝
thanks for explaining it very well. I swear I'm not a slow learner but I just never had a c.c. and I kept getting confused about how to do this or that
Why would I think that? This is what this video is for.
I too am guilty of keeping a balance thinking it's helping my score.....thanks for sharing this....I now see the light!!!
I am currently with TD bank with maximum of i believe 14 transactions per month. so what I do is paying at least 100 dollars on top of my credit card balance anticipating my future spending on the next billing cycle. I never knew about grace period on credit card, but now, I can further tune up my paying cycles. thanks.
Yeah, you really need to pay in full to make sure you keep your grace period for that interest free period.
Thank you very much for explaining in this detail. It is very helpful keep making such informational videos.
Great video
good job, you covered this pretty well
credit card grace period. great video
Correction. All you have to do is pay the statement balance to avoid interest
I'm gulty of keeping the balance to improve my credit.
Don't worry friend. Now you know. =D
E Vega research the MyFICO forums to get the real truth on how credit card utilization works.
lol
BeatTheBush, To be honest, this is going to save me I've had my credit card for a year and a half. I thought to carry a balance was a good thing but now I know it's not, Thanks man my credit score is currently 740 while carrying a balance but now I can get it higher
Thank youuu! So demystifying!
Let's say that my statement balance is $200 (closed on Jan 20), but make an additional purchase of $50 (on Jan 21). As long as I keep paying my statement balance in full ($200), I won't lose my grace period and be interest free?
Correct. If you make a new purchase after your statement closes, that new purchase is applied to your next billing cycle.
Correct. Pay your balance in full before the due date and you will ALWAYS keep your grace period.
+BeatTheBush if I lose my balance grace period how can I get it back?
@keloid long - you pay off the entire balance again before the due date and it resets. You'll get it back again.
The key TRICK IS TO PAY WHAT YOU OWE BEFORE THE CLOSING STATEMENT date, DONT PAY ON THE DUE DATE... ALSO KEEP YOUR UTILIZATION BELOW 30% PERCENT. ALWAYS.
Some videos say if you pay off your STATEMENT BALANCE in full. you will not be accrued any interest charges.
Thank you so much!
I noticed the grace period is the same length as payment due period
Question. I have a 300 credits card limit. I spent 300 and before the statement I pay 250 back and 10 day later before it due I pay the 50 dollar. Is that ok?
Always wondered how this worked, thank you :)
You are welcome! =D
BeatTheBush 😁
So, if I don't want to pay any interest, I want to make sure my utilization rate is 0% before the due date, and I want my credit card company to give me a bigger credit limit, I should spend as much as possible (from regular spending) of my limit, pay it all off about 3-5 days before the due date, and then don't use my credit card (using my debit card for food, etc) until the day after the due date?
Thank you so much for making this video. I've been looking for a clear explanation of how grace periods work. I do have one thing to point out though. In your example, after choosing to only pay $999 by the due date, isn't it a little misleading to say that the CC company retroactively starts charging interest for all PURCHASES in month 2? As I learned in your "How Credit Cards Calculate Interest" video, interest is calculated by using the average daily balance. So, wouldn't the daily balance in month 2, up until when the $999 was paid, be $2000? So, just throwing out a rough number, wouldn't the interest be more like $17.50 assuming the $999 was paid about three weeks into month 2?
I'm asking because I'm trying to get a better grasp on what happens when you lose your grace period. I realize that your purchases start accruing interest, but I want to better understand how that works more specifically.
Wow 😳 never knew I could lose my grace period on new charges too if I carried over balance.
Ok this hurt me soo well. I usually let my balance at RM2000-2500 and pay RM500++ monthly. Now gotta finish it ASAP....
You didn't mention that you have to read the fine print - some cards use the “two-cycle daily balance” method (Discover did at one point, don't know if they still do). What this means, if you don't pay off your balance from month 1 in full by its due date, 25 days (say) into month 2, not only are you charged interest on everything in month 2 (carried over balance plus new purchases), but they go back and compute interest on purchases during month 1 (and perhaps even the balance from month 0 that you paid in full during month 1).
Yeah, sometimes, it's really hard to get back your grace period after you lose it.
Good video
Thanks! =D
Yes, simple rule to live by and easier said than done for people living pay check to pay check but don't fall into the trap of buying what you can't afford and becoming a slave to credit card companies and pay the full balance EVERY month. Great video!
It does seems the living pay check to pay check situation is very hard to break out of and I completely skipped over this. Getting the grace period back might be the least of one's worries when trying to pay the bills that was due last month.
Can you still use your card during the grace period when you pay on full?
What you fail to mention is that if you do not pay off every cent of your statement balance by the due date, then you will pay interest on the unpaid statement balance amount going back to the issuance date of said statement balance plus interest on any new purchases since that statement date. Therefor, if you anticipate not being able to pay the statement balance amount in FULL (to the last penny) by the statement’s due date, then you should at least try to pay off as much of that statement balance as early as possible (during what would otherwise be your interest-free grace period) before the due date in order to lower the average daily balance that you will end up paying interest on going all the way back to the statement balance issuance date.
You should always pay it all off by the due date. Even if you do, you might not get the grace period back for one or two statement cycles.
Yeah residual interest is a bitch. I paid my credit card balance in full of 8.3k and on the next statement thinking I was in the clear I got a balance of $66 bucks. I was like wtf. So I paid that off on the very same day I got my statement that way they don’t charge interest on the 66. Shits crazy bro
ZMagickz theres a few if you have a credit card with an introductory rate of 0 % for 15 months and you just opened up the card or middle of the year.
another reason is if somebody gives you a special introductory rate of 4%
another reason let's say you have 5 credit cards and you don't want to keep making a small purchase on your less used card so if it's a card that you only will use 1 time every 4 months that would be a reason.
other than these I would pay the bill in full and on time.
Ok i understand now everything, now wat's "too early" to pay your due date then paying it "early"? is 2 weeks before the due date "early" or "too early"?
So what's the point of using a credit card and paying it in full besides building credit.
You also could get cash back if you use cash back credit cards. You also get purchase protection when using cards. You also do not have to carry cash around or as much which is better for theft reasons.
The "weird reason at 2:11 is to show a payment "on time" track record on the payment history matrix of each account on cresit reports which is 30% of credit scores. Correct? (Eventhough the grace period hack you describe is lost, in carrying the hypothetical 1 dollar at due date) payment history is more valuablewou ok dnt you agree? Just use a different card so you dont get retractively charged interest on the purchases before the due date.
I only have a 781 score. My goal is to get above 800. I have 5 figure credit line with almost no utilization and pay off my one credit card each month. Why am I not above 800?
More history and even more credit. More types of credit too. 10 years of it.
The problem with that is opening new accounts to increase available credit creates hard inquiries and shortens average account life. I guess I just have to be patient and maintain my current cards.
@@jcrowley1985 I can teach you how to make money with credit cards if you're willing to learn.
Are you talking about the 0%APR for welcome bonus? How do you know if this APR is still active?
these deals changes very frequently so you'll have to see what is available at the time you sign up.
Hi BeatThe Bush ...Please explain here. My cycle dates are as follows. opening Date 7, closing 6 and Payment Due date 31st or the last day of the month
I always make sure that on the 31st, my credit card is paid up. for example. My facility is $5000. I make sure there is no outstanding balance by this date.
My Question, if I pay the outstanding balance reflecting on the statement by the 7th i.e., much earlier than the due date, does it count. How does it affect my transactions I make after the 7th but before the 31st.
as well how does it affect the transaction, I make between the due date the 31St and 6 the closing date. should i make sure that from the due date until the statement close the outstanding balance is zero and start utilizing the card after the 7th when a new cycle begins
I want to avoid paying interest
Hi, is it okay to have below 9% utilization before the statement date but always pay off everything before the due date? (I feel like people are confusing the statement date with due date)
Yes that's OK.. Lot of persons do get the statement date vs confused. Also for your utilization it can even go to 100% as long u get it to below 30%(ideally below 10%) before your statement date, because only what it left on by your statement date is reported.
Yes this is ideal! Showing a 1% utilization by paying AFTER the statement and BEFORE the due date improves your score. Because credit card companies report right after the statement ends.
Is it good to pay the full amount early. Before the due date
Sorry for asking, but what do you do for a living? Just wondering...
BeatTheBush why in your other video of building your credit from scratch you were saying to leave $2.01?
I pay my full balances but only 4 points 10 points in total for 6 cards, that sucks
i still don't understand..
I don't know bout the statement date vs due date maybe am just dumb hahah however I still make my daily payment..voiding interest.
Here is a video exclusively about statement date vs. due date. This might work better for you: th-cam.com/video/3-knvT7JbTk/w-d-xo.html
i run a balance but i pay as soon as the new balance post. am i saving money? some times i make 2, payment in one billing cycle.
The interest is charged based on your average daily balance for that billing cycle. So making payments earlier means your average daily balance is lower. This translates into a lower interest. So pay as much as you can, as soon as you can to lower interest charged.
How many points does a hard inquiry take from your credit score? Thank you! Keep up the great work!
Depends on the strength of your current score. Mine went down from 840 to 825 points after about 2 hard inquiries. It'll be more if you're around the 700 range.
3-5 points per inquiry
Hello is this the same for the Amex charge cards?
Charge cards has no grace period. You are required to pay in full and they generally have a much shorter period before the payment is due.
I have a question. I don't think it was answered in your video or if it is I didn't get that. my due date is in March 15 2021. but I already paid that in Feb 28(Pay Day) so is it done? Can I use my credit card again to purchase stuff? well actually I've been using my credit card again even before the due date, specifically March 7 2021 - groceries. my question is. does my payment in Feb 28 don't matter anymore cause I purchase stuff before the due date? Do I need to pay those back before the due date? Does paying credit card debt before due date, and then spending cash make my payment irrelevant?
I have recently discovered your youtube channel and I have started paying off my full balances before the closing dates, my question is will any of my credit card rewards be affected since most of my rewards are set up as statement credits?
You still get your rewards because the purchases are real purchases that were not returned. So yes, you will get your rewards still. Also, try to pay all but $2 of the balance to make sure you still get a bill. Setup auto payment to pay that remainder $2 off. This is for comparability reasons for all credit bureaus.
If i lose my grace period is it possible to get it back? (CIBC in Canada)
In USA you can get it back in roughy 2 billing cycles if you aggressively pay back the fees.
Question. I have a credit card. Billing cycle April 18 - May 19th, with a due date of June 16th. Credit Karma says this card last reported on the 30th. First question is does that sound accurate for the card to be reported to the bureaus two weeks after the due date? Also, I have the card set up to auto draft the full amount due on the exactl due date. Is that okay?
Maybe I'm on the wrong video, but so I should keep a small balance before the credit report due date then pay it all off next day before the actual due date for the card?
That's only if you are paranoid that they would look at your card as inactive if you pay off your balance before the statement date. Its still reported as active even if you do so. Hence you can pay it all off. I know this makes a lot of people nervous but you can leave $1 on there if that makes you feel better.
Hello! Please help. Do I understand it correctly? I got a $500 credit card.
I made a purchase using credit on May 10 on $100, so the credit available is showing as $400. Which one of the two is correct?
1) I have 21 days starting May 10 to pay off $100, so that my credit balance goes up to $500. So the amount is due on May 31 to avoid any interest payments.
2) I will receive a statement on, let's say on June 10 and I will have 21 days starting on June 10 to make the payment to avoid any interests. So basically, I have 51 days from May 10 to make the payment and I will not be paying any interest as long as the payment is made prior to or on June 31.
Sorry, there are many dates but I would greatly appreciate your help!
Thank you!
It's generally #2. When you make a purchase at the beginning of the statement cycle, you will not be charged interest if you pay it off before the due date of that statement cycle. The due date of a statement cycles is generally about 21 days after the statement cycle ends. So the BEST case is if you bought the item at the beginning of the cycle and then pay it right on the due date.
Of course, you will only have the grace period if you kept it from the previous period and was not carrying a balance the month or two before doing this.
Should you pay the balance before the statement closing date so It is not reported to the credit bureaus?
You should but it takes constant effort. More info here: th-cam.com/video/LyBjciz4-zg/w-d-xo.html
so confused.. thought you not supposed to pay the total bal on your card because companies will think that you never used that card and it will eventually go dormant. ok.. i see i have lots to learn about how credit card works.
That is correct IF you do this before the statement date. If you do this right before the due date, it will not appear dormant. They check state of the card on the statement date.
Couldn't u get your grace period back on the first day of the next billing cycle if you pay off the balance (that was due last month) on the same day?
It depends. Most times not. You may have interest to pay that is not shown on the bill. A small amount less than a dollar means you carried a balance. This means you do not have your grace period back.
Would you say pay the full balance ON the due date or BEFORE the due date? If so how many days before the due date?
Anytime between the statement end date and due date is the same to the credit bureaus. You have to account for how long it takes to actually get credited to make sure it arrives before the due date.
Since this is about grace periods, like I said, it's tricky. You have to be on top of your card for 2 months or so to pay off interest amounts that does not appear on your statement.
Wait what if after you carry a balance after the first period but pay that plus the entire second month in full? Will you still pay interest?
Sometimes it takes one or two periods to get back your grace period. The interest accrued does not appear until you get your statement. And this varies from card to card.
I have to be honest this has alway confused me. I always pay in full so shouldn't be a problem
Paying in full avoids the confusing all together. If you get stuck one cycle by trying to take advantage of a 0% APR, you might find yourself trying to get back into the grace period.
Question i have an account with synchrony sport - i had an promotion period with the company on their card. I have e-statements and do everything usually through the automation of the app. Unfortunately i got hit with the interest rate. 2 weeks after the 30 day grace period ended when i checked. There is nothing on their app or website to tell me when my start date is to clarify even checking statements and clicking everywhere. I can fully pay off the balance and willing. Is there a way to remove the interest rate due to poor communication method to consumer ? When i called in and asked about it their answer from an account manager is telling me statements are deleted after 11 months, so i can only view the previous 11 months. What can be done ? Or is there any underlying cause like covid or hospital etc to let them re-consider ? I do know there is way from one of them telling me if they input my concern it would not go through and if they did anything that person would lose his job etc so there is a way im just not fully aware.
so im thinking of getting a laptop soon. it costs about $1k. im 20 years old and just got 2 different credit cards. 1 b of a rewards (600 line) and 1 discover it card (750 line). i will be using the bofa however because it gives me 1% cb on all purchases. i have the $1k saved up already but do u recommend to put like 200 of it on my bofa and rest in cash in order to build credit? or like 500 on bofa
I recommend to put 500 on the BofA and 500 on the Discover. Discover also gives 1% cash back. Doing this is in line with building credit on a low limit (more info here: th-cam.com/video/attQKzngqoE/w-d-xo.html) where it will help you in getting a higher credit limit more quickly. Also, consider going through the Discover shopping portal and finding the website you are going to get your laptop because they may have a high % cash back through that portal.
Lastly, consider getting this one: amzn.to/2keOwrr If it ends up being cheapest on Amazon, getting it through my link will be your cheapest option AND you will help support this channel.
BeatTheBush Thanks so much I will definitely do that. And I've been looking at the refurbished macbooks more but heard good things about the xps, I'll llook into it more.
Comes down to which style you like.. macs or pcs. =D
I thought you said to leave a 1.99 or 2 dollars balance on your statement to increase ur credit score and reduce utilization vs paying the whole balance in your other video??
This video is more about explaining how grace periods work than anything. Some things are left out to concentrate on that.
BeatTheBush I’m not concerned about grace period, so I should still use 2.01 to help increase my score and lower utilization? Thank you
Yes, that helps keep your cards active. So the trick of paying your card twice in a month, once before the statement date and again right before the due date still applies.
BeatTheBush in other words I should pay the balance minus $2.10 before the due date and carrie that balance right past through the statement closing date and after the closing date use the credit again and Repeat the cycle again correct? Thank you
just kidding!
I'm lossssst😭😭😭
I didn't pay full balance, no wonder I get charged for so much interest :(
Ahhh! You're in for a real treat if you just pay the full balance. All that interest you wont be paying will be a lot of freed up money!
He said thank you ......... he never says thank you to anyone
so can i just pay the balance one they give me my first statement, like a day after? how would that affect my credit? thank you for your vids.
You can but it would not help improve your score. You want to pay it before the statement date if you want to temporarily zero out your utilization ratio. More info here: th-cam.com/video/Gemenh0Gzzg/w-d-xo.html
BeatTheBush So when my first statement arrives they will give me the statement date? This is the second day with my first credit card so i still dont have a statement date.
Mean bank of America, not giving 90 days grace period.
BOYCOTT CLOSE ACCOUNT AT BANK OF AMERICA.
So, if my closing date is the 1st, I have until the 26th before I start getting charge interest?
Depends if you have your grace period. If you did then yes, you generally have 20-25 days to pay without interest.
@@BeatTheBush I haven't had to pay interest in months now, but I've been paying my card off before the closing date. I'm looking to maximize how long my cash stays in my bank account for maximum interest without having to pay interest, but I'm afraid to test this grace period idea at risk of having to pay an interest charge.
Fantastic video. Can you actually make a detailed example in Excel to show this with real numbers? Also, is the "statement due date" = end date of billing cycle + grace period?
What do you mean real numbers? Real dates perhaps? yes, after end of billing cycle date + the grace period is your due date.
Correct real transactions. Something like this.th-cam.com/video/Z23OtNemUgQ/w-d-xo.html
Your explanation is awesome. If you have an example with a few scenarios where full balance is paid before due date, partial payment before due date or no payment with 2-3 billing cycle statements, it will be crystal clear.
Noted. Thanks! I do realize the need to improve some of my older videos so I will indeed re-make this one.
Thank you! As mentioned before, the video is great and so is your explanation. I just think providing real transactions and covering all scenarios will cement things permanently.
Will do! =D
I’d love to translate your videos into Spanish for my Hispanic Community. Let me know !
You can do that without my permission in terms of captions. Submit them and they come to my video for approval.
Is this information 100percent legit ?.
Yes it is.
So I have a $ 2000 available credit.
Let's say I pay off my credit card IN FULL before the closing date (11/01/17 "For example") and my due date is (12/16/17 "Again for example").
Can I use my credit card again if my available credit goes back up to my original $2000 available credit after paying it off before the closing date?
Or should I wait until AFTER the due date to use my credit card again and everything is safe and sound?
Thanks! :)
Yes, you can use it after it closes and that amount will not be reported until the next closing date.
You can also use the credit limit more than $2000 if you pay it off and use it again in one cycle. Some cards limit this to about 2.5x the total limit. But if you do this, they will likely increase your limit pretty fast.
BeatTheBush ahhh thank you so much! Took so much weight off of my shoulders. You’ve honestly been such a great help in the TH-cam community! Keep making great content friend! :)
Funny thing is, you do benefit credit score wise by holding a sub 7% balance on ONE card with the remaining cards having a $0 balance...
It's not a "pay the bank" scheme smh. It's literally how the FICO algorithm for each Scorecard is made. Go research the MyFICO forums if you don't believe me. It's common knowledge.
In short, do your own research and don't believe every random TH-camr 👍
A random TH-camr with a credit score of 848/850.
How the hell does your credit score go up i have secured card 3 unsecured cards
So after you get your statement should i pay the credit card at the due date or before and should i use it after the due date or can i use it before
You pay it BEFORE the due date or you will be late. If you pay before, you can use it anytime.
Thank you for this video. I had no idea that it worked like this, and was surprised by it. (I always pay on time so it would hopefully never effect me)
Paying on time works great if you do it over the long term. But if you want things to speed up short term, there are tricks to it.
Best explanation
Hi I have my new Citi Double Cash card - thanks to you because I used cash for everything unaware of all those free money lying around, duh... thanks for opening my eyes :)
OK so question is this: There are two modes of autopayment minimum-payment & last-statement (no option full-current-balance) - is the last-statement mode good enough to keep the grace period?
HA! I'm glad! Now you get 2% on everything yay! Just be careful with a credit card since its easy to spend more than what you normally would.
Of course do not do minimum payment.
You want to pay the full amount of the last statement NOT the full amount of the current balance (this one includes the amount of last statement plus everything up to now).
So full amount of the last statement is good enough to keep the grace period.
Beat the bank/Bush💡is the man!