Why your payment date is important on your credit cards

Although it’s generally a good rule to pay your credit card bills before the due date, in some cases it could be beneficial to pay it even earlier. Doing so could help boost your credit score and avoid late fees and interest charges.

Is it better to pay credit cards early or on a due date?

Just like any other bill or subscription, your credit card statement comes every month detailing how much you owe. Making a payment before the due date avoids interest charges and late fees and, more importantly, can bring you peace of mind about being penalized.

Paying your credit card bill early can help boost your credit score, too. Here are 3 reasons why you should consider making early credit card payments:

1. No need to worry about interest charges:

‍If you pay the full balance on your credit card bill every month, you’ll avoid paying interest. Credit card companies only start charging interest after a free grace period, which lasts between the date of your purchase and your due date.

2. Improves your credit:

Getting your credit card bill paid early helps lower the percentage of credit that you have available. This is good for your credit score. It is always important to keep your credit utilization ratio under 30%, and as your payment history is reported regularly to credit bureaus, it’s smart to pay off as much as you can as soon as you can.

3. Can help you make big purchases:

Before you make big purchases, pay off your credit card as much as you can. Doing so will help free up some room. It’s frustrating when you go over your credit limit and your card is declined.

Why is it important to pay your credit card on time?

Credit cards can be helpful – or dangerous – depending on how you use them. One of the most important factors that you should consider when it comes to using credit cards is making your payments on time. Doing so will help you dodge late fees and improve your credit score.

You have several options when it comes to paying your credit card bill. One of these is to make minimum payments, which is only a portion of the full amount you owe. 

When you make a minimum payment, you start accumulating debt – and getting charged interest on the amount you didn’t pay.  

But if you skip making a payment altogether, you’ll end up with both late fees and interest charges. This will most likely affect your credit score and ultimately impact the loans or interest rates you can access in the future.

Keep your due dates marked on your calendar and set reminders a day or two before. When you’ve got multiple cards with different due dates, it’s important to keep track and on schedule.

Why your payment history is important to your credit score

When credit bureaus determine your credit score, your payment history accounts for 35% of your score. Every missed or late payment lowers your score.

But late payments aren’t generally reported to credit bureaus until they’re at least 30 days past due. So a recent late or missed payment may not show up right away. You’ll need to watch for the impact over the weeks ahead. 

Keep in mind, too, that the damage to your score depends on how late you made the payment. Even if you miss the due date, you should make a payment anyway, as soon as you can. 

According to data from FICO, a late payment can affect your credit score by up to 180 points. This is especially true for people with high credit scores. 

What is the best date for credit card payments?

Making a payment before the due date is always the best practice. But otherwise, there are no specific dates that can improve your credit score.  

If a due date is inconvenient or it’s too hard to juggle with other cards and bills, contact your card issuer and ask them to change it. It’s a common request, and most credit card companies are happy to oblige. 

Try aligning your due dates, so they make sense for your paycheck and other bills. Maybe it makes sense to pay them all on the first of the month. Or if you can manage the different dates, try staggering them to keep your cashflow stable.

Making several payments throughout the month, before a due date, can free up your credit and improve your score. Credit bureaus recognize multiple payments as responsible behavior and reward you with a boost to your score. 

Conclusion

Credit cards come with a billing cycle that typically lasts for about a month. At the end of each cycle, your card issuer sends you a statement that details out your account activity and the due date. It’s best to pay in full before the due date to keep your account in good standing and avoid late fees and charges. It’s good for your credit score and can help you to get loans and mortgages more easily in the future.

How Bright can help

Bright is a smarter, faster way to manage your credit card bills. Connect your checking account and your cards, set a few goals and let Bright do the rest!

If you don’t have it yet, download the Bright app from the App Store or Google Play.

Recommended Readings:

What is the difference between a due date and statement closing date?

What happens when you default on a credit card?