Timing is everything, especially when paying your credit card bill. If you want to avoid penalties, plan to pay your credit card bill by the due date. But an early credit card payment might make sense if you want to improve your credit score and save on interest charges.
When Is the Best Time to Pay Your Credit Card Bill?
The best time to pay your credit card bill is before it’s late. You can avoid late payment fees when you make at least your minimum payment by the due date. And if you can pay your full balance before the due date, you can avoid accruing interest charges.
Credit expert John Ulzheimer, formerly of Equifax and FICO, says making your minimum payment by the due date should be your goal to avoid late fees and negative items on your credit report.
“If you want to do better than that – and if you’re going to pay it in full anyway – you might consider paying it before the statement closing date, which would result in a zero balance being reported to the credit bureaus,” Ulzheimer says. “That’s good for interest, credit scoring and avoiding potential late payments.”
Why Credit Card Due Dates Are Important
Your credit card’s due date is important because it is the deadline for making at least the minimum payment on your card. If you make the payment on time, you can avoid late fees and other penalties for late payments, including negative credit reporting.
Ulzheimer says credit card due dates are important for two reasons: “No. 1, you agreed to make payments by the due date as defined by the credit card issuer,” he says. “No. 2, if you don’t make at least a minimum payment by that date, punitive things will start happening, including late fees.”
Understanding Credit Card Billing Cycles
A credit card billing cycle is the period of time from one payment due date to the next. The length can vary, but credit cards often have a 30-day billing cycle. Any transactions you make with your credit card during the billing cycle are included in the billing statement.
Your statement will include your previous balance – any unpaid amount carried over from the last credit card bill – and factor in purchases and payments or other credits, such as rewards. The net is your credit card balance, which will usually determine your minimum payment.
At the end of each billing cycle, you will receive a statement with a summary of your card activity. Many credit cards have a grace period – between the end of a billing cycle and the bill’s due date – to pay off the balance before interest accrues. If you don’t pay the balance in full by the due date, you will be charged interest on the unpaid portion.
“There’s a myth that it helps your credit to carry a balance from month to month. This is simply not true,” says money coach and educator Ohan Kayikchyan, certified financial planner. “Carrying a balance every month means you’ll pay unnecessary interest each month.”
Kayikchyan also warns that if you carry even a small balance from one month to the next, you will lose your credit card’s grace period, and new purchases will start accruing interest immediately. “The idea is not to carry a balance to the next statement cycle,” he says.
How Paying Your Credit Card Early Can Help Your Credit Score
Paying your credit card bill early can improve your credit score if it helps you increase your available credit and avoids late payments. Note that payment history and credit utilization are the most important factors that determine your FICO credit score.
“Early relative to the due date is meaningless,” Ulzheimer says. “If you make your payment after your statement has been generated but before your due date, that’s fantastic but won’t help your credit score, other than not making a late payment.”
You’ll need to pay before your credit card statement closing date if you want to improve your credit score with lower credit utilization. If you make a credit card payment before the statement closing date, it can reduce the balance reported to the credit bureaus, which could be positive for your credit score, Ulzheimer says.
While paying your credit card bill before your statement closes can help boost your credit score, you probably don’t need to do it every month. Ulzheimer says this move is an “ethical score hack” that can make sense if you need your credit score in tip-top shape, such as when you’re about to apply for a mortgage or car loan. After you get the loan, you can return to normal card payments.
Paying early not only helps you avoid the risk of late payment fees but also limits how much interest you pay. Even if you don’t pay off your balance, you may be able to reduce your interest charges with an extra payment before your statement closes.
When to Make Multiple Payments on Your Credit Card Bill
Making multiple payments on your credit card bill can be helpful, but it’s not necessary for everyone. If you’re managing your credit card due date and balance fine with one monthly payment, you probably don’t need to change anything. But maybe making several monthly payments, as long as you clear the balance, would help your budget and your credit score.
You can make as many payments on your credit card bill as you’d like. You can even pay it daily if you prefer to pay off charges as you make them. That can be a good budgeting strategy, especially if you’ve struggled with credit card debt.
Other reasons to make multiple payments on your credit card bill are to fit your household budget, to reduce your interest charges, to free up available credit and to reduce the risk of late fees.
When to Change Your Credit Card Payment Due Date
Changing your credit card payment due date might be a good idea if you’re struggling to make regular payments. A credit card payment due date might be inconvenient if it falls too close to when you pay your rent, mortgage or other major monthly expenses. Or you might have difficulty managing payment due dates for multiple credit cards and prefer to align all of your cards to the same due date.
Whatever the reason, if you think that changing your credit card payment due date can help you make your monthly payment on time, then ask for a different date. Usually, all you need to do is ask your credit card issuer to make the change. However, you may need to wait a couple of billing cycles for the change to take effect.
Also, Ulzheimer warns that changing your payment due date could raise a red flag with your credit card issuer because it brings up a concern that you can’t pay on time. Try to avoid changing your due date, he says, unless it makes a difference between missing a payment and making it on time.
Tips for Managing Your Credit Card Bill
Whether you’re a beginner or a seasoned card user, you can always find better ways of managing credit card bills. Here’s how you can stay ahead of your credit card payments:
- Use a budget. Restrict your spending not by your card’s credit limit but by your ability to pay for what you charge each month. Outline a budget and track spending to ensure you’re not charging more than you can pay in full.
- Monitor your credit card balance. Check in on your account before your statement comes, whether you log in once a week or sign up for balance alerts via email or text. That way, you won’t be surprised by how much you owe when your credit card bill comes due.
- Consider making multiple payments. If your credit card balance is too much to handle in a single payment, you could break it up into two or more monthly payments.
- Set up automatic payments. If you’re prone to forgetting your credit card payment or know you won’t be available to make a payment on the right day, you can set up an automatic payment for at least the minimum payment. You will avoid a late payment – and a late fee.
- Make a plan for unmanageable balances. If you’ve charged more than you can afford to pay off in time, consider your options. You can carry a balance and accrue interest charges, or you may want to seek other solutions, such as a balance transfer credit card or personal loan to pay off the balance at a lower interest rate.