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do you want to know when to pay your credit bill to increase your credit score of course you do in today's video i'm going to show you exactly how you should pay when you should pay it and what are the best strategies to boost your credit score in fact all of the things i will be mentioning in this video has helped me get a credit score over 800. what's up guys my name is nam so here i talk about personal finance if you're new here make sure you click that subscribe button so you don't miss out on any future videos so unlike your monthly bills your credit card statement gives you the ability to decide what is your payment amount and it gives you a bunch of different ways to pay it the best way to pay off your credit card depends on your budget and your financial goals with the different amounts on top of your credit card bill or your statement it can get a little bit confusing so let's jump right into it how much should you pay on your credit card bill so let me show you guys a little screenshot of a credit card statement of mine over here and i'll break down what each one of these actually mean so under new balance this is the amount due during the statement period or the billing cycle right next to that is the minimum payment due this means that during this statement period this is how much you would have to pay before you get charged with late fees depending on the credit card that you have this can range anywhere between 25 to 35 dollars per month if you have a charge card like the amex gold card then you would just have to pay the balance in full every month the reason why my show zero is that because i already made a payment on this credit card that was higher than the minimum amount even though that there is no minimum amount that i would have to pay since i do have a balance of 50 i will still have to pay that anyways to avoid paying interest so moving on to the next box this is the payment due date this is the date that you must make your minimum payment by so as long as you make the minimum payment by this date you will not be charged with any sort of late fees but as a side note for any billing cycle or statement period that you do not pay the balance in full you'll be charged with interest on that balance and depending on your credit score and the credit card itself this can range anywhere between 14 to 25 so now let's go a little bit further on to your credit card bill the majority of the time on your statement you will be able to see what is your credit limit so for instance on this credit card i have a credit limit of eleven thousand dollars and my available credit during this billing cycle is 10 953. so how this number is calculated is by taking your credit limit and subtracting your new balance and also on your credit card bill you may see how many days are inside of your billing cycle the majority of credit cards they have a cycle of either 28 to 31 days so this brings me on to my next point when exactly should you pay for your credit card bill first let me make one thing clear the key thing about credit cards is not to be late for your payments and pay your balances in full every single month before the statement due date if you were to do this consistently on every single credit card bill that you have for the rest of your life you will never have a problem with credit cards the main point of a credit card is by having another form of passive income yes i know a return of one to five percent for a specific category it's really not all that much but it's still extra money that you would be earning because you're going to be buying things that you would have bought anyways so with that out of the way let's talk about when you can pay off your credit cards to have the greatest effect on your credit score i'm gonna try to explain this as simply as i possibly can so bear with me whenever you hold a credit card you will receive a statement in the mail or via email this information will then get forwarded to the credit bureaus there are three major credit brews which is transunion experian and equifax so as a quick refresher let me go over what goes into a credit score so imagine a pie chart that equals one hundred percent thirty five percent of your credit score consists of your payment history another thirty percent consistent of the amounts owed or the proper term which is credit utilization 10 is new credit 15 length of credit history and 10 is your credit mix so for me personally i like to make things as simple as possible and i try to focus on the core things that have the greatest effect so for your credit score 65 of it comes down to your payment history and amounts owed so if you were to pay your payments on time every single month i'm proud of you something i wish my parents said as for the amounts owed or your credit utilization which makes up 30 of your credit score this is where the amounts that you pay on your credit card bill will factor in so let me give you an example so you have a better understanding of how this all works so let's just say that you have one credit card and your credit card limit is ten thousand dollars and during one month you decide to buy a bunch of things like apple laptop maybe a new tv and some jesus toast and this all costs you five thousand dollars if you were to wait until your credit card bill comes into the mail this information will be already reported to the credit bureaus five thousand dollars of ten thousand dollars is fifty percent credit utilization the higher your credit utilization is the higher the risk you are seen to lenders and this will have a negative effect on your credit score the ideal number for credit utilization amongst all accounts is roughly around 30 or less so in this particular situation if you are expected to make a big purchase on your credit card i would highly suggest making some early payments on your credit card so by the time you get your credit card statement you have a much lower balance and once this information gets reported to the credit bureaus it will show that you are actually using this card but you do not have a high credit utilization so if you were to put 5 000 on a credit card that has a 10 000 credit limit as soon as you make those purchases pay off three thousand dollars of it right away whenever your next statement comes into the mail it will only show that you have a new balance of two thousand dollars and your information will get reported to the credit brews and in turn will greatly improve your credit score this will make it look like you're actually using the credit that is available to you and when you pay your balances in full that's what i call a win-win so for all this information that i did discuss with you apply to traditional credit cards but now let me talk a little bit more about credit cards that have an introductory zero apr these are just regular credit cards too but these are just a little bit different at least for the first 12 to 18 months you commonly see this more with balance transfer credit cards or just a promo to get more people to sign up for a particular credit card whenever you put a balance on this credit card you won't be charged any interest on this card for at least a few months or whenever the promo is over depending on the credit card that you do have you may be required to pay just a minimum amount every single month to continue to keep this car at zero apr so for instance you may have one of these cards that have a ten thousand dollar credit limit you put nine thousand dollars on this card each month you are required to pay thirty five dollars as long as you pay the thirty five dollars every single month you will not be charged with any type of fees or interest but since you do have a balance on a zero apr credit card this will affect your credit utilization so to keep things simple let's just say that you have two credit cards one credit card is a zero apr credit card and another one is just a regular traditional credit card that you may have had a few years each one of these credit cards have a credit limit of ten thousand dollars your zero apr credit card has a balance of nine thousand dollars and the other credit card has a balance of two thousand dollars so in total you have a credit limit of twenty thousand dollars and a total balance of eleven thousand dollars so in this situation your total credit utilization is fifty five percent even though you're not paying interest on the card that has zero apr this will still have a negative effect on your credit card just due to the fact that you do have a high credit utilization but as a reminder your credit score does fluctuate as soon as your credit utilization goes lower and your credit history becomes longer your credit score will improve over time but in the short term you may see some dips to your credit score so let me tell you about this little myth that's going around saying that you should always have a small balance on your credit card just to show the credit bureaus that you are actually using your credit well this is a bunch of bulogi just pay your balances in full so you don't get charged that interest hopefully by now all of this information didn't just go over your head now let's talk about another strategy to pay off your credit card which is auto payment each person has different billing cycles so each situation will be completely different but if you like more of a simple approach rather than calculating your credit utilization and making your payments early but just leaving a little bit on your credit card just to boost your credit score i fully understand so what i recommend here is to turn on the auto payment feature on your credit card every single credit card company has this feature they usually have two options make the minimum payment every time your balance is due or pay your balance in full whenever your new balance is due my suggestion is to always have an auto payment of around four to five days before your balance is due and have it set to auto payments for the new balance this way you will never miss a late payment which will save you from the late fees and you will also just not be making the minimum payment so you're saving money from the interest but as a side note if you do decide to have your balance paid in full every single month with auto payments do not make any extra payments because if you do you may just be overpaying and you just have a negative balance on your credit card which means that the credit card company just has this cash sitting there until you spend it unless you ask for a check so the reality is the only bad time to pay off your credit card bill is after the payment is due because this can come with a lot of negative effects not only your credit score will be affected but you will also have to pay late fees and interest and paying more than you have to it's never a good idea but if you are paying your balances in full every single month before you get your credit card bill the credit bureaus may not see that you are actually using this credit which really does not do anything for your credit score the best thing to keep in mind is by having a credit utilization of at least 30 or less across all of your credit cards and when you get that statement in the mail or the email just pay it off in full this way you get the best of both worlds if you guys found this video helpful make sure you give this video a like because that really helps support the channel and if you want to hang out with me some more check out my videos over here you