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Paying your credit card bill on time eliminates the negative consequences of late payments, such as fees and dings to your credit. But sometimes, making a payment early instead of waiting for the due date could be a better option. Here's what you need to know about timing your payments to receive the maximum benefit.
When Should I Pay My Credit Card Bill?
The best time to pay your credit card bill is by the due date. You'll prevent late fees, the reporting of late payments to the three consumer credit bureaus (Experian, TransUnion and Equifax) and, if you pay in full, interest charges.
But you don't have to wait for the billing cycle to close to make a payment, and there may be times when not waiting can save you money or help you improve your credit scores.
Benefits of Making Early Payments
While paying your credit card balance in full every month is best to avoid accruing interest, that may not always be possible. If you carry a balance from month to month, paying your bill before the cycle closes or making multiple payments throughout the month can help reduce the amount of interest you pay because you're accruing interest on a smaller balance.
It can also reduce your credit utilization ratio—a key component of your credit score. Your credit utilization is the amount of revolving credit you use compared to the amount you have available. Ideally, you should keep your ratio below 10% to maintain solid credit scores. Making one or more credit card payments before the billing cycle closes reduces the balance your card issuer reports to the credit bureaus and may help improve your FICO® Score☉ .
| Average Credit Utilization by Credit Range | |
|---|---|
| FICO® Score Range | Average Credit Utilization Ratio |
| 300-579 (Poor) | 82.1% |
| 580-669 (Fair) | 56.1% |
| 670-739 (Good) | 35.2% |
| 740-799 (Very good) | 14.7% |
| 800-850 (Exceptional) | 6.5% |
Source: Experian data from Q3 2022
Learn more >> What Is a Credit Utilization Rate?
Always Pay by the Due Date
If paying throughout the month is too much to keep track of, stick with paying your bill by the due date. If you pay by mail, send it at least a week before it's due to allow time for the credit card company to receive and process your payment. If you pay by phone, online or through the card issuer's mobile app, you can pay up until the deadline on the day your payment is due, and it will be on time.
When Are Credit Card Payments Due?
Your credit card bill is due on the same date every month. If you're not sure what your due date is, you can typically find it on your credit card bill. The date must be at least 25 days from when the billing cycle closes and 21 days after the company sends your monthly statement. If the date the company assigns isn't ideal, it may allow you to change it to a more convenient date.
When the due date falls on a weekend or holiday, the issuer must receive your payment by the cutoff time on the following business day. If the company receives your payment after the cutoff time, it's generally considered late.
Learn more >> How to Change Your Credit Card Due Date
How Do Credit Card Billing Cycles Work?
Here are a few key terms to help you understand how credit card payments work.
- Billing cycle: Billing cycles typically last 28 to 31 days and include the time between the start and end date for your monthly statement.
- Statement balance: Your statement balance includes all charges incurred during a specific billing cycle, plus your previous balance and interest charges. It doesn't include charges posted to your account after the statement closes.
- Grace period: Grace periods allow you to avoid interest charges when you pay the balance in full by the due date. Your credit card agreement tells you which balances (purchases, balance transfers or cash advances) qualify. If you don't pay your balance in full by the due date, you lose the grace period, your balances start accruing interest and future charges accrue interest beginning on the transaction date. You may be able to regain your grace period by paying your balance in full for a specific number of months in a row, as stated in your credit card agreement.
- Due date: The due date is the date by which you need to pay the minimum amount due to avoid a late fee. Payments received by the deadline on the due date are on time.
How to Avoid Late Payments
Late payments can cost you in more ways than one. They can reduce your credit scores, and your credit card company can charge you a late fee. Credit card late fees can add up quickly.
You can avoid late fees by:
- Setting up autopay: Using autopay ensures your bills get paid on time. Because the amount you owe may vary from month to month, credit card companies generally give you three options when setting up autopay: You can choose to pay the minimum due, total balance or a specific dollar amount each month.
- Creating calendar reminders: Using reminders is a good way to remember when your bill is due. Make sure the reminders are recurring and that you don't dismiss them until you pay your bill.
- Signing up for alerts: Credit card issuers offer a variety of alerts that remind you when your payment due date is approaching and what your minimum payment and statement balance amounts are.
Frequently Asked Questions
You can pay your credit card bill the day it's due online, by phone or through your credit card company's mobile app. You can't wait until the last minute to pay your bill by mail, however. You must mail your payment at least a few days before it's due to allow enough time for delivery to the credit card company.
The only way to avoid paying interest on your credit card balance is to pay your bill in full every month—unless you have a card with a 0% introductory rate. If your card has a 0% intro APR offer, you won't pay interest as long as you pay off your balance before the promotional period expires.
Whether you should pay your credit card bill early depends on your financial situation and personal preference. Paying before the billing cycle closes can help reduce interest charges if you carry a balance. It also decreases the amount the card issuer reports to the credit bureaus, lowering your credit utilization ratio, which may help improve your credit scores.
Example: Let's say you have a $2,000 balance and a $5,000 credit limit. If you wait until the due date to pay, the credit card company will report the $2,000 balance to the credit bureaus, and your monthly credit utilization will be 40%. However, if you make a $1,000 payment before the billing cycle ends, your balance will be $1,000, and your credit utilization ratio will be 20%. Lower credit utilization ratios have a more favorable impact on credit scores.
The Bottom Line
Paying your credit card bill by the due date will help you avoid the negative consequences of late payments. That said, if you're trying to reduce the interest you pay on a balance you're carrying or improve your credit scores by keeping your credit utilization ratio low, paying your bill early or making multiple payments throughout the billing cycle may be worth considering.