r/FinancialPlanning • u/Dependent-Nail8581 • 19h ago

In need of credit card help/tips

So I turned 18 and I’m getting my first credit card and wanted to build good practices, my credit line is set to 200$ so I did research and I understand I have to stay under 60$.My plan was using my credit card to pay a streaming service that will be 16$ every month and I would pay the credit card off when I had to, but my friend said I should use 25$ every week towards gas or whatever and pay it off every week so I don’t know which one would work best

0 Upvotes

50% Upvoted

9 comments sorted by

3

u/rjp0008 19h ago

Good practice is to set autopay full statement balance and never change it. You’ll never get charged interest, and build credit. Never have a higher credit card balance than your checking account and you’re set. You can spend $200 a month if you need to, utilization of credit is one of the least important things on your credit score.

1

u/Informal-Bit-9237 19h ago

I beg to differ. Utilization is one of the biggest factors of your credit score.

That said, if he uses all 200 and pays it before the statement is generated, his statement will always show a balance of zero.

1

u/LandSweet6990 17h ago

intrested in how this works not trying to hijack anything here but also would like to use the power of CC. so do need to pay it off before the statment or pay of total balance of generated balance for the month? as long as its paid it doesnt acure intrest right, or do you have to pay it before it posts to avoid the intrest? and is there any more power in a CC other then earning reward points?

1

u/Informal-Bit-9237 16h ago

You would need to pay it off before the statement is generated, otherwise they will charge you interest. It might be possible that they charge you interest based on your daily balance? In the past I have paid off a card completely, and then next month I’m charged a few dollars of interest.

The power of a credit card? I would say you’re correct. As long as you pay your balance each month, the rewards outweigh the interest. You just have to be careful and do your financial planning properly so that you are able to pay off the balance.

1

u/rjp0008 12h ago

If you pay statement balance by the due date you’re charged no interest.

If you’re carrying a balance and getting charged interest they compute interest daily. So even if you pay your whole “account balance”, if you were carrying a balance, they will charge you however many days of accrued interest on your NEXT statement.

2

u/rjp0008 12h ago

Yes it is important but can be adjusted on a 30 day timeframe easily.

Utilization has no memory, so if you’re at 100% for 5 years and then pay off everything, and go back to the “ideal” 10-30% usage on your statements reported to the agencies, it’s like you were using it that was for the past 5 years. https://www.cbsnews.com/news/how-credit-utilization-affects-your-credit-score-and-what-to-do-about-it/

2

u/SincerelyInteresting 18h ago

You want some credit utilization. The best option would be to use it as you need, but don't go over ~30% of your limit. If you exceed this just pay off some of it. You can pay the bill early no problem, but show a good habit of using the credit and paying it will build your credit and likely net you a higher limit.

1

u/TheNewJasonBourne 10h ago

Only use it to buy things you’d buy anyway like gas and groceries. Set autopay to pay full statement balance in full on the due date.