When is the best time to pay my credit card bill? – Forbes Advisor


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When a credit card company issues an invoice, the cardholder usually has just under a month to pay off what is owed before incurring interest. Paying a bill right away (or at least as soon as possible) might seem like the most responsible thing to do, but that’s not always true, and choosing when to pay – as with most credit card decisions credit – depends on your financial situation.

Which strategy suits you?

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No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.

Rule #1: Pay in full, on time

Before we go any further, there is actually a simple answer that applies to all credit card users, regardless of circumstance: pay in full, on time. Contrary to a persistent myth, carrying credit card debt past the end of the billing period isn’t good for credit scores – it’s usually the opposite. Paying what’s owed and being consistent about it are two of the most important factors in a good credit history.

Carrying a balance forward from month to month is often expensive. The only real benefit is the capital which has been temporarily extended to the cardholder. With interest rates typically exceeding 15%, credit cards are an inefficient way to borrow money for more than a month or two. As such, the first step in the payment schedule should simply be to ensure that bills are kept small enough to be reliably paid.

Keeping bills reasonable is easier said than done and the numbers prove it – the average American adult with a credit card has a standing balance of over $5,500. Even for those responsible, “Rule #1” may come down to simply meeting a mandatory minimum to avoid penalty charges. Fortunately, any credit card user, regardless of their credit score or level of debt, can always adjust the payment schedule to improve their financial situation.

To maximize financial return, pay later

Many Americans are paying off their bills in full, and many are keeping their monthly expenses well below the recommended credit utilization threshold of 30%. People who do these two things reliably are more likely to have a favorable credit score. These regularly responsible cardholders don’t benefit much from the rush to pay monthly bills.

Instead, late payers can probably afford to take full advantage of the credit extended to them each month. Of course, the bill total will remain the same throughout a billing period, but cardholders can benefit from the “time value of money” extended to the amount owed. This value comes from the concept that there is value in simply holding a sum of money over time, based on its earning potential.

Until the cardholders actually pay the bill, credit card users can still earn interest on the money owed. Whether that money is otherwise invested somewhere or held in a checking account, the extra interest it would earn can add up to a significant amount over months and years. So, for cardholders who are not in debt or whose credit score is declining, waiting to pay until the end of a billing cycle will almost certainly increase overall wealth, if only gradually.

To improve your credit score, pay sooner

Credit card users may have already noticed that going over a monthly credit limit by 30% can hurt a credit score. Less well known, however, there is another way to influence this percentage, known as “credit utilization”. It adds a different kind of value, which goes beyond money spent or saved.

Credit card companies report a cardholder’s balance to the credit bureaus each month, but this does not necessarily coincide with the end of a billing period. Keep in mind that each time a cardholder pays off a balance in full, the credit utilization rate temporarily drops to zero percent. So, regardless of the amount spent in a month, if a cardholder pays a bill just before a balance is reported, the credit usage on the account appears to be very low. In this case, the part of their credit score that is determined by “amounts owed” – an important category for the report – will be calculated favorably. This has the potential to significantly improve a credit rating.

But without knowing exactly when your balance is reported to the credit bureaus, what can you do? A common strategy for those focused on improving their credit score is to simply pay the credit card bill quickly hoping that it will likely precede the report than if the payment was blocked.

It’s also possible to pay off the balance at any time when credit usage approaches 30%, even if that means paying multiple times during a billing period. Along with closely monitoring one’s credit usage, this may require some financial stability and may be impossible for people who find themselves waiting for the next paycheck in order to pay a credit card bill.

Paying at the last moment, of course, gives cardholders the greatest degree of flexibility with their money and may still be the only practical option if cash is tight. Most credit card companies allow cardholders to adjust the dates of their billing period so that the bill due date can fall immediately after a recurring payday. For some, this increases flexibility and helps keep credit usage low at the same time, even when living paycheck to paycheck. Depending on the bank or card-issuing institution, adjusting billing period dates can be as simple as logging into an online account or calling customer service.

To pay less interest on debt, pay as soon as possible

Credit card users who always follow rule #1 never have to worry about paying interest. But for those who have a balance, it is important to know how the amount of interest due is determined. Each month, credit card companies take an average of the balance owed by a cardholder each day of the billing period. This is called an “average daily balance”. This number is applied to the cardholder’s specific interest rate.

For convenience, indebted cardholders sometimes wait until their next bill is due to finish paying off the previous month’s balance. This means that for each day the recipient could have had the money to pay even a portion of that bill, they were still recorded as owing the full value of their balance. If, instead, they paid off their balance in the middle of the billing period, their average daily balance for that period would be cut in half. If halfway through the period they were only able to repay, say, a quarter of their debt, they could still reduce their average daily balance by more than 12%. Any amount paid at any time during the period may reduce the average daily balance.

For example, for a cardholder who has a balance of $1,000, assume that they paid $500 of their balance at the end of the billing cycle. This cardholder’s average daily balance would be greater than $1,000 ($1,000 plus interest charges) for each day of the billing cycle. Compare that to a cardholder who pays $500 in the middle of the billing cycle – whose average daily balance will only exceed $1,000 halfway through the billing cycle and then about $500 thereafter. The second cardholder would pay less interest over the course of a month. Depending on the balance and the interest rate, the savings could be significant.

Rather than deciding to pay at the beginning or end of their billing period, indebted cardholders should just keep working on what they owe, knowing that it’s not just the total paid at the end of the month that counts, but also the moment.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.


Pay credit card bills in full, on time every time. The timing of payments within the billing cycle can be optimized to maximize return on credit or to help improve a credit score. To get the most out of borrowed money, leave the money longer in an interest-bearing bank account and pay bills just before interest begins to accrue. To keep credit utilization rates low and increase your credit score, pay as soon as possible. But never forget: never wear balance if it can be avoided.


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