When is the best time of month to pay off credit card statement to avoid balance showing on credit report?

[Scott]

Last month I paid off my balance in full 5 days before the due date, buy my credit report is still showing the full balance. When is the best time of month to pay off credit card statement to avoid balance showing on credit report?

[Will]

You need to pay before the statement date, not the due date!

You are confusing due date with statement date. The credit card company reports your balance on the statement date to the credit bureaus. It then prints and send the statement to you. You need to pay before the due date if you want to avoid being charged interest.

If your goal is to avoid balance being reported to the credit report then you need to pay off just before the statement date.

[Otis]

Just one correction – the due date has nothing to do with interest. You pay interest on what you carry from one month to another.

For example, your say that balance may be $1000, and you pay the minimum required payment, say $200. The rest ($800) is being carried (rolled) to the next month, so you pay interest on that $800.

The due date has nothing to do with interest. You MUST pay the due balance (which can be anything between the full balance and the minimum payment) before the due date. If you don’t – the credit card company will report a late payment to the credit bureaus, which is very bad for your credit.

[Vern]

The statement date is when the credit card company closes the current month’s billing cycle and generates the statement, which is sent to you a few days after. Typically, billing cycle are closed 2 – 3 days after beginning of month.

The statement’s due amount (i.e. the balance) is reported to the credit bureaus a few days after the statement was generated (i.e. the statement date). Typically, the due date is around 25 days after the statement date, meaning a few days before next month’s statement date.

Example
Assuming it is now July 15th, then:

• July billing cycle will be closed on August 2nd, which is the statement date.
• July due amount will be reported to the credit bureaus s in early August as July balance, and a statement will be sent to you.
• The due date will be August 25.

So, if you want $0 to show on your credit report (which is not good on the long run) you need to pay off whatever your balance if around July 30. Regardless, you need to pay June’s balance before June’s due date (around July 25th).

[Joseph]

$0 balance is not good for the long run

Why do you want $0 balance to show on your credit report anyway? Zero balance has the same effect as not using that credit card at all, which is bad for your credit score on the long run. It’s the same as having a credit card and not using it.

If you want your credit score to build, you need some balance to show on your credit card. Any balance is good, as long as it is greater than $0.

[Shriley]

Mmm.. I didn’t know that

I thought that $0 is good for you

[Joseph]

It’s quite the opposite

The secret with credit is that you actually need to use credit to get a good credit score. Try to think of credit score as a grade for how you manage credit. If you don’t manage credit at all ($0 balance) then you can’t expect to get a good grade…

$0 balance is only recommended for a short period, typically before you seek new credit. It’s good not because it affect your credit score (it doesn’t), but because it lowers your DTI, and that is a good thing when asking for new credit.

Low DTI can and will get you better terms, but after that there’s no point continuing. What you CAN do on the long run is to keep paying before the statement date, but not the full balance amount. For example, if on the 30th of a given month your current balance is $800, pay just $700 or $750.

The rest ($50 – $100) will be reported to the CRA’s as the statement balance. Enough to satisfy both low DTI and continue building credit. This is much better than the $0 technique, because it doesn’t have adverse effects on your score for the long run.

There’s actually a good post here about zero balance. See this post.

[Barbara]

I use this all the time.

I pay the current month’s balance around the 25th and continue to use the credit card after that, so what gets reported is actually only what I purchased between the 25th to the statement date (next month’s 2nd or 3rd).

That way I always have a small balance reported on my credit card account, and my credit score has been going up inch by inch for the couple 3 yrs.

[Author]

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