Using credit cards wisely can help you build credit, earn rewards, and manage your finances effectively. One of the best credit card hacks is the "Two-Statement Balance Payment Trick", which can boost your credit score while avoiding interest charges.
How It Works
Credit card companies report your balance to credit bureaus at different times, usually at the end of your billing cycle. If you carry a high balance, even if you pay it off in full each month, it can still negatively impact your credit utilization ratio—one of the key factors in your credit score.
By making two payments per billing cycle, you can lower your reported balance and improve your credit score. Here’s how:
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Make a Mid-Cycle Payment: Pay off a portion (or all) of your balance before your statement closing date. This ensures a lower balance is reported to credit bureaus, reducing your credit utilization ratio.
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Pay the Remaining Balance Before the Due Date: This avoids interest charges and keeps your account in good standing.
Why This Works
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Lowers Your Credit Utilization: Credit utilization (the percentage of your credit limit you're using) should ideally be below 30%, and even lower (under 10%) for optimal credit score improvement.
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Boosts Your Credit Score Quickly: Since your reported balance is lower, credit bureaus see responsible credit use, improving your score.
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Avoids Interest Charges: As long as you pay the full balance by the due date, you won’t be charged interest.
Additional Tips
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Set up automatic payments for at least the minimum due to avoid missed payments.
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Use a high-rewards credit card to maximize cashback, travel points, or other perks.
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Monitor your credit score and reports regularly to track improvements and catch any errors.
By using this simple but effective credit card hack, you can improve your financial health, build a stronger credit score, and make your credit cards work for you!