Multiple monthly card payments can boost credit scores

If you want to hike up your credit score, making all your payments on time and keeping revolving debt to well below the credit limit will put you on the path to success. After all, these are the two top factors in the FICO score, which is used by most lenders to evaluate borrowers.

A great way to ensure that your accounts are always paid on time and debt never spirals out of control is to send multiple payments throughout the month. Not only can it result in a better credit score, it offers other compelling advantages.

Here’s what you need to know about paying your credit card bill in stages, and when you may want to pay at the end of the month after all.

Benefits of making frequent credit card payments

You are under no obligation to wait until your credit card bill is due before sending a payment. The date written on your billing statement indicates when you need to pay in order to keep the account in good standing. Therefore, you are free to send multiple payments (also called micropayments) to your credit card issuer as many times as you like. Here’s how making multiple payments can help you:

Your credit scores should increase

By constantly borrowing and repaying on time and in full with your credit card, you are proving that you are a responsible person. It’s an indication that you don’t rely on credit cards to make ends meet, but instead are using plastic like a savvy professional. Credit scores are based on credit activity, and since you’ll have a robust history of perfect payments and no carried balances, your scores should rise. Any new lender will view you as a low-risk customer and preferred accounts should soon be available to you.

You’ll always remain in the black

It can be easy to overcharge with a credit card, and many accounts come with large limits that can be too tempting. However, if you pay off each charge as it happens, you’ll avoid racking up unmanageable card debt. All you have to do is ensure you have enough money in your checking account to cover your charges.

You won’t get hit with interest or late payment fees

Outside of not having a big bill hanging over your head, paying constantly so you never revolve a balance will guarantee that the creditor won’t add financing fees to carried-over debt. Timely payments also guarantee that you won’t incur any late payment fees.

You won’t compromise your rewards

If your credit card allows you to rack up rewards, such as cash, points or miles, you’ll stay out of expensive debt and profit from the process – especially if you spend a lot with the card. The more rewards you accumulate, the more you can redeem for goods, services and airfare. Keeping the balance at zero also means that interest won’t eat into the value of those rewards.

You’ll stay in financial control

Multiple payments can also give you an added sense of control over your money. Not only will you avoid being shocked by the scale of any debt you racked up over a month, but you’ll also likely stay within your budget.

How to make micropayments

If you decide to use the micropayment method, consider these payment options:

• Weekly payments. Once a week, check your current balance and pay the entire amount due.
• Per paycheck payments. Take some of the money from each paycheck and send it to your credit card issuer.
• Pay as you charge. Every time you use your credit card, make a payment for the exact amount you spent.

The easiest way to pay is with your credit card issuer’s free app since wherever you are you can send the payment via your phone or tablet. Almost all issuers offer an app, so if you haven’t already, download yours now.

You can also pay through the issuer’s website from your computer or call and pay by phone. Another option is to use your bank’s online bill-pay system, and many financial institutions allow customers to arrange for payments to be deducted from a bank account automatically a couple of times a month.

Although the process for each payment method is swift, it may take a few days before the payment is posted. When it does, your credit card balance will be lowered by the amount you sent.

When should you not make frequent credit card payments?

Although making frequent payments provides plenty of benefits, there are a couple of potential drawbacks to consider.

All credit cards offer an interest-free grace period, which typically ranges between 25 and 30 days. This time gives you the flexibility to charge something you need or want and then wait to pay for it without financing fees being applied. If you need to cover more important expenses first, paying a credit card balance that isn’t costing you anything doesn’t make sense.

And then there’s the stress factor. Micropaying, even when it’s a streamlined process, is still more time-consuming than making one payment at the end of the month. If frequent credit card payments overcomplicate your life and the process is causing you anxiety, drop back down to single payments.

There also may be times when you want to charge something essential that you can’t afford to pay for quickly. In that case, satisfying the debt in installments can be prudent. Just send as much as you can (at least the minimum), in as short a time as possible. Your credit rating may be negatively impacted by a debt that’s close to the credit limit, but when you get the balance back down to zero, it should recover.

Bottom line

Sending multiple payments throughout the month can be a powerful way to handle your credit card account, especially when your goal is to increase your credit score. While micropayments also offer a whole host of other financial and lifestyle benefits, the decision is always yours. You can pull back and wait until the bill is due to pay any time you choose.