Dumb credit card question

[naomi 343]

I got a credit card last month for the sole purpose of establishing credit. I put a $630 expense on it and my account is set to make automatic payments.

Just realized I was vaguely thinking (not actually thinking about it) some percentage of the total cost would be chipped away with over the coming months.

But I think that the automatic payment is just going to pay the full balance. It's completely doable but my idea was to put something big ticket on there to get to the point of establishing credit quickly. Am I missing a step?

[Strike 3,947]

I would think that when you set up automatic payments it would allow you to set how much it is going to pay.  I would expect the default to be the minimum monthly payment rather than the full amount because they want you to pay as much interest as possible.   But check with the bank.  Not enough info here to definitively tell you what it will do.

[naomi 343]

The banker and I did talk about avoiding interest and paying the balance. What I can see is it's scheduled to pay "Last stmt bal".

Not sure why that's just now clicking with me as paying..exactly the accumulated charges. Balance means balance   

I don't imagine carrying a balance over would somehow help establish credit. I guess it's just a matter of making sure to have some charges, big ticket when appropriate, and always paying them off promptly.

 

[tubby_mcgee 686]

You should be able to set it to pay minimum amount or entire balance.

[bandrus1 413]

You can establish credit without carrying a balance

 

Also you do t need to have big ticket... A lot of credit is due to longevity of on time payments not amount

[NorthernVike 2,079]

Remember when you were a kid and they said there are no stupid questions?   Yeah, they lied.

[TBayXXXVII 2,106]

9 hours ago, naomi said:

I got a credit card last month for the sole purpose of establishing credit. I put a $630 expense on it and my account is set to make automatic payments.

Just realized I was vaguely thinking (not actually thinking about it) some percentage of the total cost would be chipped away with over the coming months.

But I think that the automatic payment is just going to pay the full balance. It's completely doable but my idea was to put something big ticket on there to get to the point of establishing credit quickly. Am I missing a step?

Bandrus is correct.

 

You build up credit by paying things off in a timely manner.  You don't need have a couple big items and pay them off or down.  The ideal thing to do is to put a certain amount of money on your card that you know you can pay off quickly.  You really don't need to go over 25% of your available balance.  "Making payments" is definitely not required to build credit.  Using generic round numbers as examples, let's say you can afford to pay off $100 at a time in one shot per month.  Set your credit limit to be $500 to $1000 and charge $100 every month and pay it on 3 to 5 business days before the due date... meaning, send the check 5 to 7 days before.  If you can auto/online pay, then 3 days in advance is fine.  Do that every month.  You can go up to $150 or $200, but don't over extend yourself.  Stay under 30% of your limit.

[Reality 2,710]

Wtf..  Auto pay a credit card?  Manually make the payment each month online depending on what the balance is.

[MTSkiBum 1,593]

Listen to Reality and Bandrus.

No big ticket items, just use it for small items occasionally and make on time payments. Do not schedule automatic payments, you should be looking at your balance at least once a week.

I probably make ~4 payments on my main credit card each month.

[Patriotsfatboy1 1,432]

4 minutes ago, Reality said:

Wtf..  Auto pay a credit card?  Manually make the payment each month online depending on what the balance is.

They make it easy for people. I don’t want places with the ability to pull from my account directly, so I prefer the push method of payment.

[Reality 2,710]

2 minutes ago, MTSkiBum said:

No big ticket items, just use it for small items occasionally and make on time payments. Do not schedule automatic payments, you should be looking at your balance at least once a week.

I probably make ~4 payments on my main credit card each month.

This.

[Patriotsfatboy1 1,432]

18 minutes ago, MTSkiBum said:

I probably make ~4 payments on my main credit card each month.

Why? Do you worry you will have a big nut at the end of the month and this helps your spending decisions?

[NorthernVike 2,079]

Get a CreditKarma account.    It will literally walk you through what you need to know.

 

Hard Inquiries - Low impact on credit score.  The less the better.

Total Accounts - Low impact on credit score.  The more the better.  I know this sounds stupid but it's how they do it.\

Credit age - Medium impact on credit score.  The longer you hold a loan/credit card the better.   Paying off a car or home loan early can actually lower your credit score. Dumb!

Derogatory Remarks - High impact on credit score. 

Credit card use - High impact on credit score. - I you have to carry a balance on your credit card, keep it under 30% of your credit limit.  Ideally,  under 10%.

Payment history - High impact on credit score - Make your payments on time. 

 

 

This isn't rocket surgery people. 

 

They need to start teaching this in high school. 

[Bier Meister 1,512]

49 minutes ago, Reality said:

Wtf..  Auto pay a credit card?  Manually make the payment each month online depending on what the balance is.

this.

If you need to, create a reminder in your phone  3 days prior to due date each month.

[MTSkiBum 1,593]

50 minutes ago, Patriotsfatboy1 said:

Why? Do you worry you will have a big nut at the end of the month and this helps your spending decisions?

 

I look at my credit card balance each week just to make sure no funny charges pop up, i make a payment at that time because it is easy.

My comment was more to just look at your credit card transactions each week. Companies charge you when free trials expire, verizon, comcast, raise their rates without telling you,  etc. It is good to monitor your credit card for common practices that are not fraudulent, but should be.

 

[Kanil 519]

I may be wrong here but I think the best way to build the credit is not to put one big purchase on it and pay it off but to use it more often and pay it off.  I have a card that I only use to buy gas for my wife and I.  Pay it off completely at the end of every pay cycle.

[naomi 343]

I'm not understanding the downside of having the balance paid through autopay.

If you wind up losing track of expenses you've made, it's a good idea to interact with the account and do it yourself to keep abreast. But I intend to understand what all is on it and skip the step of signing in and going through the motion.

 

 

I will check into it, not totally ignore it, but do it when it works for me. It's set to pay the standing balance before it's due by a couple days.

[The PosterFormerlyKnownAs 61]

My experience ...

We put 90% of our daily spending on credit card, and autopay full amount each month.  (We have never used debit cards.)

having a high balance can drop your credit score, but once it is paid in full does help increase your credit score. (My swing last month was 100 points, due to an exceptionally large credit card bill.)

I’ve never intentionally carried a balance month to month ... don’t want to pay interest and fees.  Autopay in full works wonders for that ...  the manual process (or old school mailing checks) has much more potential risk IMO.  And autopay is processed the day the payment is due ... so if you have funds in an interest bearing account, you benefit there.

 

 

 

[fandandy 3,311]

A good credit card for you might be a to find one that gives a percent cash back and use it strictly for gas.  Pay it off in full each month and it's free money on something that you would buy anyway, plus it saves you from needing to go inside to pay.  https://secure.bankofamerica.com/applynow/welcome.go

[bandrus1 413]

10 hours ago, naomi said:

I'm not understanding the downside of having the balance paid through autopay.

If you wind up losing track of expenses you've made, it's a good idea to interact with the account and do it yourself to keep abreast. But I intend to understand what all is on it and skip the step of signing in and going through the motion.

 

 

I will check into it, not totally ignore it, but do it when it works for me. It's set to pay the standing balance before it's due by a couple days.

There is nothing wrong with autopay

[naomi 343]

Thanks for all the responses.

The statement date is the 25th. The autopay-the-full-balance date is the 22nd. 

It didn't autopay the balance yesterday, I guess because the first statement hasn't happened.

Not sure about waiting until 3/22, so I'll probably manually pay the balance soon. I get the impression I can't know the actual due date unless I talk to a banker or wait until the statement is out.

[naomi 343]

18 hours ago, fandandy said:

A good credit card for you might be a to find one that gives a percent cash back and use it strictly for gas.  Pay it off in full each month and it's free money on something that you would buy anyway, plus it saves you from needing to go inside to pay.  https://secure.bankofamerica.com/applynow/welcome.go

It's a 1.5% cash back on all purchases card. Just looked it up which was good; I was forgetting that there's a $200 reward if you charge one thousand in the first 3 months. 

 

[fandandy 3,311]

7 minutes ago, naomi said:

It's a 1.5% cash back on all purchases card. Just looked it up which was good; I was forgetting that there's a $200 reward if you charge one thousand in the first 3 months. 

 

I see my link timed out.  It was for 3% on gas and $150 credit if you spend $500 in 90 days.  You're doing fine though getting something back for free.  Just keep paying it off in full to avoid the interest.

https://promo.bankofamerica.com/ccsearchlp8/?cm_mmc=Cons-CC-_-Google-PS-_-bank-of-america-gas-card-_-Brand_Cash-Rewards_Exact&code=BAACQN&gclid=EAIaIQobChMI6Y6FlvbS4AIVQr7ACh3vawyxEAAYAiAAEgI4SvD_BwE

[Cdub100 3,366]

[Super Cubs 132]

I have my auto pay set on the minimum just in case for some reason I miss or forget to make a payment.

[Bier Meister 1,512]

30 minutes ago, naomi said:

Not sure about waiting until 3/22, so I'll probably manually pay the balance soon. I get the impression I can't know the actual due date unless I talk to a banker or wait until the statement is out.

if you log into your account, you should be able to see a due date.

[sderk 1,040]

Just freaking pay your bill however it works.. Never carry a balance. Stay out of debt and you will be fine. Don't worry about building a credit history because you want to go into debt later in life. Stay the hell out of debt.

[naomi 343]

21 minutes ago, Bier Meister said:

if you log into your account, you should be able to see a due date.

Looked high and lo, just seeing the statement date.

[NorthernVike 2,079]

3 hours ago, sderk said:

Just freaking pay your bill however it works.. Never carry a balance. Stay out of debt and you will be fine. Don't worry about building a credit history because you want to go into debt later in life. Stay the hell out of debt.

This is wrong on so many levels. 

 

Great credit score will save hundreds on insurance cost alone.  Not to mention intrest rates on loans.

[sderk 1,040]

6 hours ago, NorthernVike said:

This is wrong on so many levels. 

 

Great credit score will save hundreds on insurance cost alone.  Not to mention intrest rates on loans.

You are exactly incorrect. 

[frank 2,144]

Straight cash homie. 

[tubby_mcgee 686]

On 2/22/2019 at 8:03 AM, Reality said:

Wtf..  Auto pay a credit card?  Manually make the payment each month online depending on what the balance is.

 

 

Auto pay makes more sense.  Zero chance of forgetting.