When is the best time to pay my credit card bill?

Paying your credit card bill on time is important for a number of reasons.

First, you can avoid paying interest on your balance if you pay in full. Second, it can improve your credit score by keeping your credit utilization low. And finally, if you miss a payment, your credit card company may report it to the credit bureaus, which would lower your credit score.

However, the best time to pay your credit card bill depends on several factors, including the due date for your minimum payment and your cash flow.

Before you decide when to make your credit card payment, it’s important to know how credit card billing works.

What is a credit card billing cycle?

The credit card billing cycle is the approximately one-month period between statement closing dates. A billing cycle can last from 28 to 31 days, depending on the card.

At the end of each month, your card issuer sends you a statement with your account’s balance, interest charges and other charges. This statement has a date on which it closes and a date on which you have to pay in order to keep your account in good standing.

The due date will always be listed on your statement, or you can find it by logging into your account and reviewing your terms. Credit card payments tend to be due about three weeks after the last statement’s closing date, but you may have more time depending on your issuer’s policy.

Note that there is typically a grace period in which you can make purchases on your credit card without incurring interest charges, provided you pay your bill in full by the due date. If you pay less than the full balance, you’ll lose the grace period and any purchases you add to your balance will be charged interest. A credit card grace period typically lasts at least 21 days.

When is the best time to pay my credit card bill?

There’s no rule as to when you should pay your credit card bill, as long as you pay on time. And the most convenient time for you can vary depending on when your paychecks come in, how much cash you have on hand and what other bills you need to cover on payday.

Let’s say you get paid twice per month and your rent and utility bills are due at mid-month, while your credit card bill’s due date is at month’s end. You’ll likely want to prioritize your rent and utilities when your first paycheck of the month comes in, particularly if you have minimal cash flow.

But you don’t have to make just one credit card payment each month. If there’s cash left over after paying other bills, it may be a good idea to make at least the minimum payment on your credit card bill and then pay off the remaining balance when your next paycheck arrives.

A great way to ensure you always pay on time and keep your balance at a minimum is to use your credit card like it’s a debit card. When you make a purchase, pay it off as soon as it gets added to your card’s balance.

Benefits of paying your credit card bill before it’s due

If you can pay your bill before your monthly due date, you’ll enjoy several benefits.

• You’ll save money on interest charges. When you pay down your balance, it lowers the amount of interest you’ll pay on your next statement. And if you pay in full before the due date, you won’t incur any interest charges.
• You’ll maintain a good credit score. Payment history and credit utilization are the two most important credit scoring factors in the FICO formula, accounting for 35 percent and 30 percent of your score, respectively. Paying on time and in full are the best ways to keep your score in great shape.

Note that your credit card issuer reports your account activity to the three credit bureaus — Equifax, Experian and TransUnion — once per month. Whatever your balance is on that day is what will be reported to the bureaus, and that will determine your credit utilization, or the amount of credit you’re using relative to your credit limits.

If you want to keep your reported credit utilization as low as possible, you might consider calling your issuer to find out when it reports your account activity, and then pay down your balance before that day. But that may not be necessary as long as you pay in full every month.

What happens if I miss a credit card payment?

If you miss a credit card payment, the ramifications can be serious. You’ll likely be charged a late fee, your interest rate may increase and your credit card company may send you overdue notices.

In addition, your credit card issuer may report the late payments to credit bureaus, which would significantly lower your credit score. If you continue to miss payments, your issuer may turn your account over to a collection agency, and you could eventually face legal action.

Some card issuers may be willing to work with you if you’re having a hard time making payments. To help get you back on track, you can:

• Review your income and expenses to see where you can save money.
• Set up automatic payments to ensure your card is always paid on time.
• Ask about moving your payment due date to a date that works better for your cash flow.
• Contact a reputable credit counselor who can help you come up with a plan to pay off your debts. Note that your credit card statement includes a phone number you can call to inquire about credit counseling services.
• Also consider asking your card issuer about a hardship program, if you are struggling to pay down your balance.

Bottom line

Paying your credit card bill early and often is a foolproof way to preserve your credit score and ensure you never miss a payment. It can also reduce your average daily balance and help you avoid paying interest.

No matter what time of the month you choose to pay, be sure that it’s before the due date and that the payment covers at least the minimum due, if not your entire balance.