You probably already know that credit card payments have a big impact on your credit score, your standing with your credit card issuer, and whether you’re charged a late fee for your payment. Paying your credit card bill at the right time is key to ensuring you don’t hurt your credit or incur expensive fees and a past due balance you can’t afford. Knowing when to pay your credit card is an important part of managing and building your credit.
When should you pay your credit card bill?
The short answer: you can pay your credit card bill any time before the cutoff time on the due date. That’s your credit card issuer’s only requirement for an on-time payment. Your payment due date will fall on the same date each month. This makes it much easier to keep up with your due date.
Your credit card issuer must receive your payment on the due date, even if that date falls on a weekend or a holiday. If, for example, your payment is due on the 25th of each month, your December due date will fall on Christmas. Your payment will still be due. That’s because you can still make a payment online or by phone, even though the credit card issuer’s office may be closed and mail won’t be delivered.
By law, your credit card issuer must accept payments received by 5 p.m. on the due date on time. Some credit card issuers extend the cutoff time to 8 p.m. or midnight, but it varies. Aim to make your payment before 5 p.m. unless you’re sure your creditor’s payment cutoff time is later.
Most credit card issuers allow you to make online payments up to the cut off time, but you’ll be charged a late fee if your payment is even a few seconds late.
You might also be able to make expedited phone payments in the minutes leading up to the cutoff time. Your credit card issuer may charge a fee for expedited payments, but it will be less than a late fee.
What happens if you pay late?
Your credit card payment is considered late if you pay your credit card bill after the cutoff time on the due date or you pay less than the minimum. Your next billing statement will include a late fee of up to $37 as a penalty for the late payment.
If you make up your missed payment before it’s 30 days late, your credit score is safe. However, after 30 days, the late payment will be reported to the credit bureaus. At that point, it goes on your credit report and will impact your credit.
Your credit card issuer will apply the penalty rate to your balance if your payment is more than 60 days past due. And, if you get behind by 180 days (or six months), your account will be closed, charged-off, and possibly sent to a collection agency.
It’s much easier to make your payment on time than to deal with the snowball of consequences that come with a late payment. The more behind you are, the harder it is to catch up. If you miss your payment, don’t wait for your next due date. Catch up as quickly as possible.
Can you pay before the due date?
You don’t have to wait until the due date to make your payment. You can send payment any time. Your credit score doesn’t go up or down based on the fact that you paid early; it only matters that you pay on time.
Paying early can reduce the cost of carrying a balance depending on how your credit card issuer calculates finance charges. For example, many credit card issuers calculate finance charges using the average daily balance method. Paying earlier in the billing cycle lowers the average daily balance that goes into calculating your interest. This is assuming you don’t make additional purchases during the billing cycle.
Paying before the due can also be beneficial from a money management standpoint. For instance, you might send your credit card payment right after your payday because it fits better with your budget and the other bills you have to pay.
If you typically have a hard time remembering to make your payment, paying before the due date removes the pressure of trying to make a last minute payment.
How much should you pay?
Your credit card issuer only requires you to make the minimum payment each month. The minimum payment is only a small percentage – between 1% and 3% – of your full balance due. You can find the minimum payment printed on your credit card statement, by calling the customer service number on the back of your credit card, or by logging into your online account and checking.
(The exception is when you have a charge card which requires you to pay the full balance by the due date.)
Your credit card issuer requires you to pay the minimum, but it’s best to pay your full balance. There are a few benefits to doing this. First, you’ll avoid credit card debt because you’re not carrying a credit card balance. Second, you’ll save money on interest since you’ve paid your balance off right away.
What if you can’t afford to pay your balance in full?
If you can’t afford to pay your full balance, it’s a sign that you’ve charged too. As a rule of thumb, you should never charge more than you can pay off in a month. This may be completely opposite to how you’ve thought of credit cards. Most people use credit cards to make purchases when they don’t have the money. However, most people get into credit card debt because of this thinking.
When you can’t pay off your balance, pay as much as you can each month until your balance is paid off. Pay at least the minimum, but more than that if you can afford to. In the meantime, avoid using your credit card until you’ve completely paid off the balance. Going forward, make a habit of only charging what you can pay off each month.