Everyone is worried about credit scores and monthly bill cycling. Let’s keep this in mind, the credit bureau will not find out your daily expenses. They will find out whatever the credit card company reports to them monthly. For example, if you buy a cup of coffee with your credit card, credit card companies will not report to the bureau the very next day but at month’s end.
What do the Credit card companies report to credit bureau?
They will add all your expenses for the past 30 days (billing cycle) and the remaining balance from previous months and report the sum to the credit bureau if you don’t pay it off.
What you should do?
Always pay it off before the statement closing date, so it will not be reported to the bureau. If you can’t pay the bill fully, try to pay most of it. Always remember, keep your credit spending less than 10% of your credit line to keep your credit score high.
Example: If you have 3 different credit cards, add the total of all and that is your credit card limit.
Credit card 1 $2000
Credit card 2 $8000
Credit card 3 $5000
The sum of your credit limit is $15000. You must keep your total credit spending below $1500. Which is only 10% of your total credit limit.
Here is the cool part of having a credit card. If you have to spend all $15000 for some reason and you pay back $13500 before your Statement closing date (billing cycle), the credit bureau will not find out and you keep your credit score high.
Alternatively, you have the option to pay it fully and not pay any interest.