When’s the Best Time to Pay Your Credit Card?

If you have a credit card, you likely know you must pay it each month before the due date to avoid a late fee or penalty. What you may not know, though, is when it is the best time to pay your credit card bill.

The answer to this question varies depending on your financial situation, goals for your credit score, and your card issuer's policies. However, you never want to be late.

Here's what you need to know to decide the optimal time to pay your creditors each month.

Key takeaways

• Paying your credit card company before it reports your balance to the credit reporting agencies can sometimes help improve your credit score.
• Making your credit card payment on time allows you to avoid expensive late fees or a penalty APR.
• Paying your card too early could mean giving up the benefit of an interest-free loan.
• If your goal is to improve your credit and ensure you pay on time, an early payment can be better than a later one

How credit card billing cycles work

When you charge items to your credit cards, you don't have to pay off your card balance immediately. You'll receive a statement or bill on a set schedule. The period between one statement and the next is called your billing cycle, which usually lasts between 28 and 31 days.

Here's what happens during your billing cycle:

• The last day of each billing cycle is called your statement closing date. On this date, the card issuer will generate a statement that lists all of the transactions from the prior 28-31 days (depending on your billing cycle length). These transactions happened after your last statement and during the current billing cycle.
• You'll receive your statement. This statement will show the balance due as of the statement closing date. Anything you charge after the closing date will appear on the next billing statement. The current statement will also list any fees or interest charges you owe.
• Your statement will specify a billing due date. This must be at least 21 days after the creditor delivers your statement, and it must be the same for every billing cycle. Your creditor can’t charge interest on your purchases until after your due date, and you won't pay any interest on the things you charged if you pay your bill in full by the due date.

At some point during each billing cycle, your credit card company will report your credit balance to the three major credit reporting agencies (Equifax, Experian, and TransUnion). The date this occurs is called the reporting date.

Some card companies set the reporting date to be the same day as the statement closing date. However, others may report your balance earlier or later, so it depends on your card issuer.

Why the timing of your payment matters

Because the due date for your credit card payment must be at least 21 days after you receive your statement, you have a lot of leeway regarding when you can make your payment to the card company.

It's smart to be strategic about when you pay your card within the allowable time so you can use your money as wisely as possible. Paying your card at the correct time can:

• Help you to minimize costs associated with late payments.
• Reduce your financial struggles, because you can essentially take an interest-free loan for several weeks with your cards and pay at a convenient time
• Help you to achieve a good credit score, as your creditor reports your positive payment history

There's no one-size-fits-all answer to the best time to make a credit card payment, though. For some people, an early payment is the right choice, while others do better if they pay on or close to the due date.

When should you pay your card early?

In many cases, you should pay your credit card earlier than the required due date. Here are some situations where it can make sense.

You want to avoid interest charges

The average credit card interest rate is 21.51% as of May 2024, according to the Federal Reserve Bank of St. Louis. Paying credit card interest is very expensive, so you want to avoid it.

While you have until the due date to pay your creditor and not owe interest, you may want to pay early to avoid potential problems. If you wait until your due date and something comes up, you may not be able to pay your balance in full. Your creditor will immediately charge interest on any balance remaining from your past billing cycle once the due date has passed.

Paying even a month's worth of interest can be expensive. For example, if you owe $5,000 on a card with a 21.51% APR, you'd pay $89.16 in monthly interest if you had a 30-day billing cycle and didn't pay your balance off. That's a lot of money.

You don’t want to risk late fees and penalties

Paying early also guarantees you won't get hit with late fees and penalties, which could become a reality if you wait until the due date to pay and then can’t.

While the best credit cards may not charge late fees, many cards do. The average late fee on credit cards is $32. The Consumer Financial Protection Bureau finalized a rule in March 2024 that capped late fees to $8 per incident, but that hasn’t taken effect as of this writing. Either way, you should still avoid unnecessary fees.

Paying late could also trigger a penalty APR. This replaces your standard APR with a higher one, which typically lasts for at least 6 months. Under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD), you have to receive a notice 45 days before the penalty APR takes effect. Additionally, many card companies don't apply a penalty APR until you are at least 60 days late.

Still, card interest is already very high even for those with good credit, so gambling on your ability to make a payment when the due date actually arrives is a big risk. You can eliminate it by paying early.

You’d like to keep your credit utilization low

Your credit utilization ratio is another key factor that could prompt you to pay your card early. It’s the second most important factor that affects your credit score, and it measures the amount of available credit you use. If you have $5,000 in available credit and have a $1,000 balance, your ratio is $1,000/$5,000, or 20%.

A high credit utilization ratio is a red flag that you may be borrowing too much. It's best to keep the ratio below 30% of the credit available.

The credit bureaus calculate your ratio based on what the card issuer reports. Since the reporting date on your card is sometimes earlier than the due date for your payment, your card company could report a high balance even if you pay your card in full.

Paying your card early before the reporting date ensures a lower balance is reported, so a high utilization ratio doesn’t cause damage.

You want to better plan for your payments

The optimum time to pay depends on your financial goals, not some arbitrary date set by your card company.

You may want to pay early because you get paid well before your card's due date and you'd rather send the money to creditors while you have it before you spend it on something else.

Alternatively, you may want to pay early to avoid the risk of something coming up around your due date and leaving you without the money to pay your creditor — and with no time to bring in extra cash to avoid a missed or delayed payment.

When might you wait until the due date?

There are some circumstances when you may wish to wait until the due date to pay your card.

You don’t have enough cash to pay early

You can't pay a credit card with money you don't have. If you’re living paycheck to paycheck and you don't have the funds available to make an early payment, you'll need to wait until closer to your due date to give yourself time to earn more cash.

You want to cover other priorities first

One of the benefits of credit cards is that they provide an interest-free loan during your billing cycle and until your due date. This provides you with the flexibility to use your money wisely for your financial goals.

Rather than paying your card early, you may decide to do other things with your money first. For example, you may want to prioritize contributing to an emergency fund early in the month and then paying your credit card bill after you've paid yourself first.

As long as you pay your card by the time the due date arrives, it can make sense to put other things on your financial to-do list ahead of paying your creditors early.

You have a promotional interest rate

Many credit card issuers offer special promotional rates, especially to new card members. For example, you could get a 0% rate on purchases for the first 12 months, or your card might offer a 0% rate on transferred balances for 12 or 15 months.

If you have a promotional rate, you're paying no interest on your borrowed funds. This provides less incentive to pay ahead of schedule, since you know you won't incur interest anyway.

Your credit utilization is currently too low

If you pay off your credit card balance in full, you could show a $0 balance when credit card companies report your details to the credit reporting agencies. In some scoring models, a $0 balance makes it appear you’re not using the card.

This can hurt your credit score since your rating improves when you show you’re using credit responsibly by borrowing and paying off what you owe. It's typically better to have a utilization ratio in the low single digits than a 0% ratio.

To be clear, this doesn’t mean you should carry a credit card balance. You likely don't want to pay interest at any point ever. However, it does mean that paying your balance in full before your reporting date might not help your credit score.

Why you should avoid late payments

Paying early and paying on time both make good sense under some circumstances. But paying late doesn’t for these reasons:

• You could pay a late fee of $32 on average.
• You could face a penalty APR.
• You could damage your credit score, as your late payment could remain on your credit record for as long as 7 years.

If you suspect you may be late, contact the credit card issuer quickly. They may be able to help you work out a payment plan or temporarily enter into a forbearance program to minimize the consequences.

So, when is the best time to pay a credit card bill?

As you can see, there are both pros and cons to early versus on-time payments, so here’s how to decide what’s best for you:

• Determine when you'll have the funds available based on the timing of your paycheck and your other financial goals. If you don't have the money to pay early, you'll obviously need to pay on time instead.
• Decide whether you want to prioritize paying off your card or doing other things with your money first. If you have other things to accomplish, it may not make sense to send in your money before the deadline.
• Find out when your credit card company's reporting date is so you'll know when the credit bureaus will receive your data. You may want to pay off some of your balance before then to avoid your credit utilization ratio climbing too high, or you may want to delay making a full payment before then to avoid having a $0 balance reported.

Callout: You also have options besides making a lump-sum payment. For example, you could try the 15/3 rule, which suggests you should make one payment 15 days before your due date and another three days prior. Some commentators suggest this might improve your credit score more quickly, but this isn’t certain.

The important thing is to have a rock-solid financial plan to ensure you don’t pay late.

Tips for effectively managing credit card payments

Making a monthly credit card payment can seem like a hassle and a financial burden, but there are ways to make the payoff process easier. Here's what you can do:

• Change your due date: Card companies often allow you to change your due date, but they might limit the number of times you can do so each year. You could change the date to align with your paycheck, or you might make all your card payments due at the same time each month for easier tracking.
• Budget for payments and set up autopay: If you've set up a budget and you feel confident that you'll have the money in your bank account, arrange for automatic payments on your chosen date.
• Set up a payment reminder: You can set up a calendar reminder to alert you when your payment is due. Your card company may also offer the option to sign up for text or email reminders and alerts.
• Monitor your account statements: To avoid surprises, check your statement each month to make sure the charges are legitimate and to confirm your payment due date.

I have always had autopay on my credit cards, and I pay off my full statement balance two days before my credit card company's reporting date. This way, my balance is lower since only those charges made since the close of my billing cycle are included in my card balance. Plus, this ensures that I'm never late with my payments.

I also receive text alerts after my payment to confirm that there are no missed payments, and I have a note on my calendar to confirm that the text came in.

This technique has worked well and helped me to earn a credit score of 792, which is considered “excellent” based on the VantageScore model. Give it a try to see if it can work for you.

FAQs

Bottom line

There are pros and cons to paying your credit card on time as well as early. Either approach can make sense depending on your specific financial goals, so consider your budget, priorities, and credit situation to decide which payment strategy to use.

You do, however, want to always avoid paying late, so you don’t incur extra fees and damage to your credit. If you struggle with payments or your credit score, talking to a creditor counselor could help with debt management.

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