6 Min Read | Updated: August 15, 2023
Originally Published: December 22, 2022
How and When to Pay Your Credit Card Bill
It’s important to pay your credit card bill in full—and on time—each month. Avoid fees, and optimize your credit score, Here’s what you need to know.
At-A-Glance
Paying your credit card balance in full and on time each month can help you optimize your credit score and avoid certain fees.
You’ll pay more in interest if you make only the minimum payment each month.
Autopay can help ensure you pay your credit card bill on time.
Knowing how and when to pay your credit card bill has become an important 21st-century skill. If you want to maximize your credit rating and avoid paying extra interest charges and late fees, it can be helpful to understand your credit card’s billing cycle. If you know how the billing cycle works, you could even use it to your advantage.
Paying the full balance on your monthly credit card statement on or before the due date could help you save money and improve your credit score. Let’s explore these ideas on how and when to pay your credit card bill after debunking two common myths.
Paying a Credit Card Bill Myth 1: Carry a Balance
Many people think that you need to carry a balance on your credit card from month to month to build your credit score. But the opposite is more true: Paying your card’s full statement balance each month can have a positive impact on your credit score. This is because it lowers your credit utilization rate. A low credit utilization rate demonstrates to lenders that you borrow money responsibly and pay it back reliably.1
Paying a Credit Card Bill Myth 2: Make the Minimum Payment
Another myth is that if you make the minimum payment each month, you won’t incur extra charges. On the contrary, if you do not pay your card’s minimum payment for a given month, you can be charged a late fee. Late payments could also cause your annual percentage rate (APR) to rise. And, your creditor might report the missed payment to the major credit bureaus, which could affect your credit rating.
If you only make the minimum payment, you will also likely incur interest charges that you could otherwise avoid by paying your statement balance in full. For example, imagine you have a credit card with a $2,300 balance, a $46 minimum payment, and a 20% APR. If you only pay the monthly minimum and never make another purchase, it could take nine years to pay off that balance and it could cost over $4,500, due to compounding interest over all those years. Ultimately, paying your credit card bill in full could be to your advantage.
3 Smart Tips for How to Pay Your Credit Card Bill
A good practice when paying your credit card bill each month is to pay your full outstanding balance on or before the due date. Busy jobs, families, social lives, and all kinds of day-to-day distractions can make it easy to lose track of due dates or forget to pay a credit card bill. This is especially true if you have multiple credit cards. Here are three tips to help you make sure this doesn’t happen to you:
- Set up text or email alerts. If you prefer to review statements before you pay your credit card bill alerts can act as helpful reminders about upcoming due dates. Some credit card companies have mobile apps you can use to set notifications that give you a weekly snapshot of spending, payment reminders, statement-ready reminders, bill-due reminders, and more.
- Request the same payment date for all cards. If you have more than one credit card, one uniform payment date could make your life easier. Then, you only have to keep track of a single monthly payment date. You can usually arrange this by either calling your card issuer or making the request online. Of course, there’s no guarantee you will receive the exact date you request.
- Use autopay for your credit card bills. Setting up automatic payments can help take the worry out of missing a payment. Just make sure you have enough funds in the bank to cover your payments.
Let’s talk a little more about autopay and how you can use it to pay your credit card bill.
3 Ways to Use Autopay to Pay Your Credit Card Bill
Most major credit card companies offer automatic payment options, which allow your credit card company to debit your bank account on a set date and for a set amount each month. This can minimize your risk of late payments or late fees. There are generally three ways to use autopay to pay your credit card bill:
- Pay the minimum due. This is a basic safety measure that will ensure you never miss a payment due date. It’s especially useful if you want to review your bills manually each month before paying them, but don’t want to overlook a deadline.
- Pay the full balance on your card. If you maintain a large enough balance in your bank account to cover your monthly credit card balance, this approach could help you save money on interest charges and avoid late fees.
- Pay a fixed amount. This can be a useful strategy if you’ve stopped using a credit card and want to pay down the balance by making regular payments that are greater than the minimum amount due each month. It could also be a useful strategy if you usually spend the same amount on your credit card every month.
Is it Good to Pay Your Credit Card Bill Early?
There could be benefits to paying your card bill early. For example, some individuals pay off a portion or all of their balance early, before the monthly due date, to help lower their credit utilization rate. Some people pay their credit card bill twice a month, in the middle and at the end of their monthly cycles, to keep the utilization rate as low as possible. If you plan on paying your monthly balance in full each month, one of these approaches could be a good way to go.
The Takeaway
Paying your credit card bill on time and in full each month can help you avoid interest charges and late fees. Taking advantage of an autopay service can help you to ensure that your payments aren’t late.
1 “What Should My Credit Utilization Ratio Be?," myFICO
Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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