How to pay your credit card bill. When should you pay your credit card bill? Should you bring balance? If you want to avoid paying late fees and interest, this is what you need to know.
Staying on top of your credit card bills is an important part of building and maintaining strong credit.
Payment history is a major component of your credit score and losing just one payment can have an impact. Fortunately, it doesn’t take much effort to manage once you know what things to look out for.
So, what exactly do you need to know about paying your monthly bills? Here’s a quick overview that can help you get – and stay – on top of your payments.
3 tips that will help you stay on top of your payments
Understandably, life can be busy and it can be challenging to follow the payment due date. So how can you make sure you don’t miss payment?
- Consider setting up automatic payments for your credit card bills – but make sure you have enough money in your bank account first.
- Or, set a text or email warning to be notified when your payment due date arrives.
- If you have multiple cards, always consider asking for the same payment start date for all your accounts. You can generally do this by calling your card issuer or making an online request. This way, you don’t need to track multiple payment dates.
Should you have a balance on your credit card?
Many people believe that you need to carry balances from month to month on your card to build credit, but that is only a myth.
What really helps build credit is pay your credit card bills on time. In fact, if you carry a balance, you might end up having to pay a large amount of interest without any benefit for your credit.
We recommend avoiding bringing balance if possible. If you cannot pay off your balance in full, make sure you make at least the minimum payment.
If your credit card balances start to pile up and you are stuck in interest payments, you might want to consider a balance transfer card, especially cards that offer an introductory 0 percent APR period.
When should you immediately pay off your credit card balance?
Aim to pay your credit card bills in full on the due date of your statement. Paying the full balance of the report every month has a positive impact on your credit and shows the lender that you can borrow money responsibly.
If your credit utilization (the total number of credits you currently use divided by the total number of credits you have) is at the higher end, you can consider making several payments each month, because this can reduce your level of credit utilization. In general it is recommended to keep your overall credit utilization below 30 percent.
Your credit card issuer will usually report your credit activity to the credit bureau every month. So, if you pay off some – or even all – of your credit card bills before that date, you can reduce your credit utilization, which in turn can benefit your credit.
For example, suppose you have charged $2,000 in purchases and you have a $4,000 credit limit. When the date of your statement arrives, your card issuer will report your credit usage of 50 percent.
But suppose you decide to pay off $1,000 before your statement arrives. That will reduce your card balance to $1,000. When your statement is issued, your credit usage will only be reported 25 percent in this example.
To find out exactly when your information is reported to the credit bureau, contact your card provider.
Paying credit card bills – or any bills, for that matter – is never too fun, but maintaining good payment habits can have a big impact on your credit.
Remember: try your best not to miss payments, avoid carrying balances to save interest, and automate your payments or track when they are due. https://bit.ly/2LVn5UU