Tips on my Credit Card Strategy

[Credit_Fight_TKO]

I have one credit card with a $4,000 limit. I plan to pay it off in one lump sum next month, to get it down to a zero balance (to remove some fees and interest that have been racking up).

After that, I'd like to start using it to pay all my monthly finances, in order to build credit as well as make it easier to pay them in one simple payment. Are there any advantages/disadvantages this?

Also, very important, is that I pay this off each month before I’m charged any interest. I don't want this new setup to cost my anything, so what do I need to find out from the card company regarding billing in order to ensure they don't have a chance to tack on any fees?

[wyr]

Sounds like a good strategy as long as you pay in full every month like you said. If you pay the full statement Balance on or before teh due date, you won't be charged any interest. Most banks let you schedule autopay for the full statement balance so it automatically pays the right amount.

[NoHardLimits]

Since you have been carrying a balance, there are sometimes additional fees or interest even after paying down to zero.  Google the meaning of "trailing interest".  Make sure you understand how that applies and pay any additional amount ASAP.  Afterwards, you should not have to pay any more interest as long as you pay the statement balance in full by the due date.

[CYBERSAM]

You can setup Auto Pay statement balance to make sure there are no interest being added!

Now that is great as you would have everything under control, but if your monthly finances are more than 50% of credit limit, this would effect your FICO Score. Therefore you may need to pay couple of times a month!

I would recommend planing a strategy to maximize your rewards for paying/spending by adding 2 more cards that can grow in credit limit to help your score.

[CorpCrMgr1]

Great for you getting your finances together. Definitely pay often and set up auto pay. Good luck!

[FicoMike0]

The banks are pretty clear about when the payment is due. Nothing tricky.

As others have mentioned, letting your utilization get high will hurt your score. It's not longterm resets each billing cycle.

If you are puting a lot of spending on the card, you may be able to get a limit increase. That makes the utilization easier to manage.

Good luck!

[AyaMai]

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@Credit_Fight_TKO wrote:

I have one credit card with a $4,000 limit. I plan to pay it off in one lump sum next month, to get it down to a zero balance (to remove some fees and interest that have been racking up).

After that, I'd like to start using it to pay all my monthly finances, in order to build credit as well as make it easier to pay them in one simple payment. Are there any advantages/disadvantages this?

Also, very important, is that I pay this off each month before I’m charged any interest. I don't want this new setup to cost my anything, so what do I need to find out from the card company regarding billing in order to ensure they don't have a chance to tack on any fees?

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You are not able to buy something with cash, you should not be charging on your credit only in emergencies period, credit cards are for getting backcash or points. Have your automatic payments turned on even for minimum payment to avoid late payments. Pay your purchases before closing statement date not due date, try do your purchaes at the beginning of the new statement, giving you more time to pay, I do not mean to pay at the last minute. Apply for one card every six month starting with Chase. Ask any question, even you think it is stupid, don't get offended by their comments, they are here to help, once awhile they will give few wake up calls, I have gotten a few them, I do appreciate their time and their honesty.  Wish you the best on your credit card journey. I prefer to be broke than be in debt. 

[SouthJamaica]

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@Credit_Fight_TKO wrote:

I have one credit card with a $4,000 limit. I plan to pay it off in one lump sum next month, to get it down to a zero balance (to remove some fees and interest that have been racking up).

After that, I'd like to start using it to pay all my monthly finances, in order to build credit as well as make it easier to pay them in one simple payment. Are there any advantages/disadvantages this?

Also, very important, is that I pay this off each month before I’m charged any interest. I don't want this new setup to cost my anything, so what do I need to find out from the card company regarding billing in order to ensure they don't have a chance to tack on any fees?

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Nothing wrong with your strategy.

1. Pay the current balance off.

2. Make sure to pay any trailing interest that pops up.

3. Pay in full each month before the due date.

If you want to maximize your FICO scores, don't let the statement balance exceed $1120, or 28% of the limit.