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Lets say I got monthly credit card bill for $100 but when I go to bank account online to pay I see that my current credit card spendings are already $150. Should I pay $100 or $150?

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up vote 10 down vote accepted

You can pay the full amount. There is no harm in paying off your credit card in full. Not paying your credit card minimum and on time is what will negatively affect your credit rating.

I at times have paid ahead (paid more than the current charges) on my credit card if I know I had a large purchase in the near future.

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Paying off your card in this manner has no effect on your credit score.

However it does carry an opportunity cost in lost interest had you kept the money in the bank.

Pay off the full monthly billed amount every month, but there's no need to pay more than that. If you can, sign up the card account for automatic payments to avoid late fees and charges. This is the biggest drain cards have on yourself and your score.

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In the UK, I believe that you get "good points" on your credit report for:

  • Making the minimum payment quoted on your statement, by the due date; or
  • Paying off the full balance quoted on your statement, by the due date.

Paying any additional amount is possible but will not earn you any "good points".

If you fail to make the minimum payment by the due date then this will count as a black mark against you, and will be visible on your credit report for the next 12-24 months.

I avoid missing payments by setting up a Direct Debit to automatically pay the bill on time.

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In general, there would not be a difference between paying the actual balance versus the balance on your statement. However, if the balance on your statement is routinely a large percentage of your available balance, it could negatively affect your credit score--even if you pay it off every month.

A portion of your credit score is based off the balance the credit card company reports to the credit bureaus. Lets say in your example your credit limit is $200. Your $100 balance would be 50% of your available credit and would be reported to the credit bureaus that way ($100 balance with a $200 limit). The only data the bureaus see is the balance from you statement. So, if you are in this situation every month (50% credit used on the statement date), then your credit would be negatively affected. It is generally advised to keep your used credit to under 30% of your available credit to avoid a negative impact on your credit score.

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